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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
SENATE BILL 887 By: Quinn
AS INTRODUCED
An Act relating to insurance; amending 36 O.S. 2011,
Section 311.4, as amended by Secti on 1, Chapter 275,
O.S.L. 2014 (36 O.S. Supp. 2020, Section 311.4),
which relates to annual statements reporting market
conduct data of insurers; authorizing imposition of
civil fine; amending 36 O.S. 2011, Section 615.2,
which relates to Biographical Affi davits; modifying
time frame for Business Character Report; amending 36
O.S. 2011, Section 638, which relates to compliance
relating to examinations; updating statutory
references; requiring insurer using credit
information to provide certain exceptions to how
credit information is used; specifying e xceptions;
authorizing insurer to require certain information
for granting of exception; declaring insurer in
compliance with law in certain situation; construing
provision; requiring insurer to provide notice o f
exceptions; amending 36 O.S. 2011, Section 996 , which
relates to assigned risks; removing prohibition on
disapproval of certain market plans; authorizing the
Oklahoma Automobile Insurance Plan to issu e certain
policies; declaring policies as proof of certain
required financial responsibility; providing for
liability; requiring filing of annual au dited
financial statement; authorizing Commissioner to
establish necessary rules; amendin g 36 O.S. 2011,
Section 1116, as amended by Section 18, Chapter 45,
O.S.L. 2012 (36 O.S. Supp. 2020, Section 1116), which
relates to penalties for failure to remit tax es;
removing time limits; specifying application of
certain penalty; amending 36 O.S. 2011, Section 1219,
which relates to claims reimbursement or denial;
modifying time and manner of claim payment or denial;
amending 36 O.S. 2011, Section 1250.5, as amend ed by
Section 1, Chapter 105, O.S.L. 2012 (36 O.S. Supp.
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2020, Section 1250.5), which relates to acts by an
insurer constituting unfair claim settlement
practices; authorizing certain method of payment;
amending 36 O.S. 2011, Section 1250.7, as amended by
Section 7, Chapter 95, O.S.L. 2018 (36 O.S. Supp.
2020, Section 1250.7), which relates to property and
casualty claims; modifying time for notice; amending
36 O.S. 2011, Section 1250.8, which relates to motor
vehicle total loss or damage claim; providing for
electronic payment; amending 36 O.S. 2011, Section
1435. 2, as last amended by Secti on 1, Chapter 88,
O.S.L. 2018 (36 O.S. Supp. 2020, Sect ion 1435.2),
which relates to definitions; modifying definitions;
amending 36 O.S. 2011, Section 1435.20, as last
amended by Section 1, Chapt er 263, O.S.L. 2019 (36
O.S. Supp. 2020, Section 1435.20), which relates to
limited lines producers; updating language; adding
type of license limited lines producer may receive;
amending 36 O.S. 2011, Section 1445, which relates to
fiduciary capacity; authorizing electronic payments
in certain circumstances; amending 36 O.S. 2011,
Section 1450, as amended by Section 6, Chapter 294,
O.S.L. 2019 (36 O.S. Supp. 2020, Section 1450), which
relates to licensing procedure; modifying time for
certain notification; requiring background reports by
certain persons; amending 36 O.S. 2011, Sections
2006, as amended by Section 1 , Chapter 78, O.S.L.
2014 and 2007 (36 O.S. Supp. 2020, Section 2006),
which relate to the Oklahoma Property and Casualty
Insurance Guaranty Association; modif ying composition
of Board of Directors; authorizing insurer Board
representative to designate alternate member with
duties of insurer; removing authority of Commissioner
to appoint Board members in certain circumstances;
modifying duties of the Association; amending 36 O.S.
2011, Section 2023, as amended by Section 2, Chapter
384, O.S.L. 2019 (36 O.S. Supp. 2020, Section 2023),
which relates to the Oklahoma Life and Health
Insurance Guaranty Association; clarifying terms;
amending 36 O.S. 2011, Section 3101, which relates to
definitions; modifying definition; amending 36 O.S.
Supp. 2011, Section 3105, which relates to motor
service club agents; updating language; clarifying
persons who may be appointed; removing requirement of
certain notification; modifying certain fee for
producers; modifying length Commissioner may suspend
certain license; amending 36 O.S. 2011, Section 3108,
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which relates to misrepresentation ; updating
language; amending 36 O.S. 2011, Section 363 9.1, as
amended by Section 11, Chapter 44, O.S.L. 2012 (36
O.S. Supp. 2020, Section 3639.1), which relates to
personal residential insurance; req uiring
cancellation of personal residential insurance
coverage as of date certain; amending 36 O.S. 2011,
Sections 4030 and 4030.1, which relate to paying
premiums for single life policies and payment of
proceeds; amending 36 O.S. 2011, Section 4055.7,
which relates to the Viatical Settlements Act of
2008; amending 36 O.S. Section 4055.9, which relates
to viatical settlements; amending 36 O.S. 2011,
Section 4103, which relates to schedule of premium
rates; deleting exception; amending 36 O.S. 2011,
Section 4112, which relates to payment of proceeds;
amending 36 O.S. 201 1, Section 6060.12, as amended by
Section 3, Chapter 75, O.S.L. 2020 (36 O. S. Supp.
2020, Section 6060.12), which relates to calculation
of premium costs; modifying penalty determination;
prohibiting change of n ame of prepaid funeral benefit
permit holder; requiring Insurance Commissioner
approval; providing for application for change of
name; authorizing waiver of approval requirement;
authorizing denial of change of name application;
providing for issuance of p repaid funeral benefit
permit with new name; authorizing Insurance
Commissioner to prescribe rules; amending 36 O.S.
2011, Section 6216.1, whi ch relates to payment of
claims to public adjuster; amending 36 O.S. 2011,
Section 6217, as last amended by Sectio n 14, Chapter
269, O.S.L. 2013 (36 O.S. Supp. 2020, Section 6217),
which relates to continuing education; eliminating
continuing education adv isory committee; defining
term; providing for dorm ant captive insurance company
to apply for certificate of dorman cy; listing
requirements for certain dormant captiv e insurance
companies; providing exceptions; requiring certain
application prior to issuing insurance policies;
providing for revocation of c ertificate of dormancy;
providing for examination; authorizing t he Insurance
Commissioner to promulgate rules; amending 36 O.S.
2011, Section 6552, which relates to definitions;
modifying definition; amending 36 O.S. 2011, Section
6753, as amended by Secti on 38, Chapter 150, O.S.L.
2012 (36 O.S. Supp. 2020, Section 6753), which
relates to home serv ice contracts; modify ing type of
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authorized financial security deposit; amending 36
O.S. 2011, Section 6904, which relates to issuance of
certificates; modifying agency responsibl e for
determining certain compliance; removing duty and
notification requirements of State Commissioner of
Health; modifying time frame for issuance of
certificate; amending 36 O.S. 2011, Section 6907,
which relates to reasonable standard s of quality care
and credentialing; modifying applicable agency;
amending 36 O.S. 2011, Section 6911, which relates to
grievance procedures; modifying responsible agency;
amending 36 O.S. 2011, Section 6919, which relates to
examination of affairs, program s, books and records;
amending 36 O.S. 2011, Section 6920, which relates to
suspension or revocation of a certifica te of
authority; eliminating role of State Commissioner of
Health in certain hearin gs and determinations;
modifying conditions in which Commiss ioner may revoke
certain license; amending 36 O.S. 2011, Secti on 6929,
which relates to contracts with qualified persons;
repealing 36 O.S. 2011, Sections 1435.40, as amended
by Section 1, Chapter 23, O.S.L. 2016 (O.S. Supp.
2020, Section 1435.40), 1612.1, and 16 22, which
relate to applicants for licens ure, property for
employees; and mortgages on real estate; providing
for codification; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2011, Sect ion 311.4, as
amended by Section 1, Chapter 275, O.S.L. 2014 (36 O.S. Supp. 2020,
Section 311.4), is amended to read as follows:
Section 311.4. A. Insurers authorized to do business under the
provisions of the Oklahoma Insurance Code shall annually file w ith
the Insurance Commissioner market conduct annual statements
reporting market conduct da ta of insurers on the thirty-first day of
December of the previous year. The statements shall report on the
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lines of insurance and be in such general form and conte xt as
approved by the National Association of Insurance Commissioner s
(NAIC), and as supplemented for additional information required by
the Insurance Commissioner by rule. The statements shall be
prepared in accordance with NAIC instructions, including a ny
supplemental filings described in the NAIC instructions. If no
forms or instructions ar e available from the National Association of
Insurance Commissioners, the statements shall be in the form an d
pursuant to instructions as provided by the Insurance C ommissioner.
Insurers not authorized by the Insurance Commissioner to provide the
lines of insurance approved by the National Association or the
Insurance Commissioner shall not be required to file market conduct
annual statements. For good cause shown, the Insurance Commissioner
may extend the time within which market c onduct annual statement s
may be filed. The Insurance Commissioner may provide copies of
market conduct annual statements, amendmen ts, and addendums to such
statements and market conduct d ata taken from such statements to the
National Association of Insura nce Commissioners only if, prior to
sharing of the market conduct annual statements, amendments,
addendums to such statements or ma rket conduct data taken from such
statements, the Nationa l Association of Insurance Commissioners
enters into a written agree ment with the Insurance Commissioner to
maintain the confidentiality of the shared information.
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B. The Insurance Commissioner may adopt rules implementing this
section including rules tha t:
1. Add lines of insurance to be reported in market conduct
annual statements; and
2. Require the filing of market conduct annual statements and
any amendments and addendums to such statements wi th the National
Association of Insurance Commissioners, a nd the payment of
applicable filing fees required by the NAIC.
C. Insurers shall pay a fil ing fee of Two Hundred Dollars
($200.00) to the Insurance Commissioner for the filing of the market
conduct annual statement.
D. No waiver of an applicable privileg e or claim of
confidentiality in the documents, materials, or other information
shall occur as a result of disclosure to the Insurance Commissioner
or the Commissioner’s designee under this section o r as a result of
sharing the documents, materials or othe r information as provided in
this section.
E. Market conduct annual statements and any ame ndments and
addendums to such statements, filed with the Insurance Commissioner
pursuant to this section in electronic format or otherwise, shall be
treated as working papers and documents as set out in subsection F
of Section 309.4 of this title.
F. The Insurance Commissioner may use market conduct annual
statements or amendments or addendums to such statement s to assist
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in determining whether a market conduct exami nation or investigation
of an insurer should be conducted. For purp oses of completing a
market conduct examination of any company under Sections 309.1
through 309.7 of this title, the Insurance Comm issioner may, in the
sole discretion of the Insurance Com missioner, use market conduct
annual statements or amendments or add endums to such statemen ts to
assist in determining compliance with the laws of this state and
rules adopted by the Insurance Commis sioner.
G. For any violation of this section, the Insura nce
Commissioner may, after notice and opportunity for a hearing,
subject an insurer to a c ivil penalty of up to One Thousand Dollars
($1,000.00) for each occurrence. Such civil penalty may be enfor ced
in the same manner in which civil judgments may be en forced.
SECTION 2. AMENDATORY 36 O.S. 2011 , Section 615.2, is
amended to read as follows:
Section 615.2. All domestic insurers and health maintenance
organizations are requi red to keep biographical information current.
Domestic insurers and health maintenance organizations are required
to provide Biographical Affidavit s within thirty (30) days of any
change in officers, directors, key management or any person
acquiring ten percent (10%) or more controlling interest in a
domestic insurer. The information shall be on the National
Association of Insurance Commissioners (N AIC) UCAA Biographical
Affidavit Form. The Biographical Affidavit is to be certified by an
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independent third party acceptable to the Insurance Commissioner
that has conducted a comprehensive review of the background of the
applicant and has indicated that the Biographical Affidavit has no
significantly inaccurate or conflicting information and is accepted
as the Business Character Report. As used in this section,
“independent third party” is one that has no affiliation with the
applicant and is in the bus iness of providing background checks or
investigations. The Business Character Report must be current and
shall not be older than one (1) year six (6) years.
SECTION 3. AMENDATORY 36 O.S. 2011, Section 638 , is
amended to read as follows:
Section 638. Every MEWA Multiple Employer Welfare Arrangement
shall comply with Articles 15 throug h 19 and Sections 308 309.1
through 310 309.7, 311.1 and 619 of Title 36 of the Oklahoma
Statutes this title which pertain to examinations, deposits and
solvency regulation.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 953.1 of Title 36, unless there
is created a duplication in numb ering, reads as follows:
A. Notwithstanding any other law or regulation, an insurer that
uses credit information shall , upon written request from an
applicant for insurance coverage or an insured upon a form provided
by the Insurance Commissioner, provide reasonable exceptions to the
rate of the insurer, rating clas sifications, company or tier
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placement or underwriting rules or guidel ines for a consumer who has
experienced and whose credit information has been directly
influenced by any of the following events:
1. Catastrophic event declared by the federal or state
government;
2. Serious illness or injury, or serious il lness or injury to
an immediate family member ;
3. Death of an immediate family member;
4. Divorce or involuntary interruption of legally owed alimony
or support payments;
5. Identity theft;
6. Temporary loss of employment for a period of three ( 3)
months or more, if it results from involuntary termination;
7. Military deployment overseas; and
8. Other events, as determined by the Insurance Commissioner.
B. If an applicant or insured submits a re quest for an
exception as provided in subsection A of this section, an insurer
may, in its sole disc retion:
1. Require the consumer to provide reasonable written and
independently verifiable documentation of the event;
2. Require the consumer to demonstr ate that the event had
direct and meaningful impact on the credit information of the
consumer;
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3. Require the request be made no more than sixty (60) days
from the date of the application for insurance or the policy
renewal;
4. Grant an exception despite the consumer not providi ng the
initial request for an exception in writing; or
5. Grant an exception to requiring a written request where the
consumer asks for a consideration of repeated events or the insurer
has considered this event previously.
C. An insurer is in compliance with any other provision of law
or Insurance Department rule relating to underwriting, rating or
rate filing notwithstanding the granting an exception under this
section. Nothing in this section shall be construed to provide a
consumer or other insured with a cause of action that does not exist
in the absence of this section.
D. The insurer shall provide notice to consumers, either at the
time of acceptance of an insurance application or at policy renewal,
that reasonable excepti ons are available and inf ormation about how
the consumer may inquire further.
SECTION 5. AMENDATORY 36 O.S. 2011, Section 996, is
amended to read as follows:
Section 996. Assigned Risks. A. Agreements may be made among
insurers with respect to the equ itable apportionment among them of
costs for insurance which may be affor ded applicants who are in good
faith entitled to, but who are unable to p rocure, such insurance
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through ordinary methods, and such insurers may a gree among
themselves on the use of re asonable rate modifications for such
insurance, such agreements and rate modifications to be subject to
the approval of the Insurance Commissioner. Nothing in the Property
and Casualty Competit ive Loss Cost Rating Act shall permit
disapproval of a residua l market plan permitting an insurer to elect
voluntary direct assignment .
B. The Oklahoma Automobile Insurance Plan is authorized to
issue policies of insurance in the name of the plan for the
applicants described in subsection A of this section and to act on
behalf of all participating members in connection with the policies.
The policies shall be considered proof of financial responsibility
in accordance with Section 7 -600 of the Highway Safety Code.
C. The participating members shall be liable to th e plan for
all costs, expenses and liabilities in proportion to its share o f
voluntary market premium for the types of policies written under the
plan in this state.
D. The plan shall file an annual audited financial statement
with the Commissioner.
E. The Commissioner is authorized to establish rules and
regulations required t o implement the purposes of this section.
SECTION 6. AMENDATORY 36 O.S. 2011, Section 1116, as
amended by Section 18, Chapter 45, O.S.L. 2012 (36 O.S. Supp. 2020,
Section 1116), is amended to read as follows:
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Section 1116. A. An y surplus lines licensee or broker who
fails to remit the surplus line ta x provided for by Section 1115 of
this title for more than sixty (60) days after it is due shall be
liable for a civil penalty of not to exceed Twenty -five Dollars
($25.00) for each additional day of delinquency, per policy. The
Insurance Commissioner sha ll collect the tax by distraint and shall
recover the penalty by an action in the name of the State of
Oklahoma. The Commissioner may request the Attorney General to
appear in the name of the state by relation of the Commissioner.
B. If any person, assoc iation or legal entity procuring or
accepting any insurance coverage from a surplus lin es insurer where
Oklahoma is the home state of the insured, otherwise than through a
surplus lines licensee or broker, fails to remit the surplus line
tax provided for by Section 1115 of this title, the person,
association or legal entity shall, in additio n to the tax, be liable
to a civil penalty in an amount equal to one percent (1%) of the
premiums paid or agreed to be paid for the policy or policies of
insurance for each calendar month of delinquency or a civil penalt y
in the amount of Twenty -five Dollars ($25.00) whichever shall be the
greater. The Insurance Commissioner shall collect the tax by
distraint and shall recover the civil penalty in an action in the
name of the State of Oklahoma. The Commissioner may requ est the
Attorney General to appear i n the name of the state by relation of
the Commissioner.
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SECTION 7. AMENDATORY 36 O.S. 2011, Section 1219, is
amended to read as follows:
Section 1219. A. In the administration, servicing, or
processing of any accident and healt h insurance policy, every
insurer shall reimburse all clean claims of an insured, an assignee
of the insured, or a health care provider within forty -five (45)
calendar days after receipt of the a paper claim and thirty (30)
calendar days after receipt of a n electronic claim by the insurer.
B. As used in this section:
1. “Accident and health insuran ce policy” or “policy” means any
policy, certificate, contract, agreement or other instrument that
provides accident and hea lth insurance, as defined in Section 703 of
this title, to any person in this state, and any subscriber
certificate or any evidence of coverage issued by a health
maintenance organization to any person in this state;
2. “Clean claim” means a claim that ha s no defect or
impropriety, includin g a lack of any required substantiating
documentation, or particular circumstance requiring spec ial
treatment that impedes prompt payment; and
3. “Insurer” means any entity that provides an accident and
health insurance policy in this state, including, bu t not limited
to, a licensed insurance company, a not -for-profit hospital service
and medical indemnity corporation, a health maintenance
organization, a fraternal benef it society, a multiple employer
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welfare arrangement, or any other entity subject to reg ulation by
the Insurance Commissioner.
C. If a claim or any portion of a claim is determined to have
defects or improprieties, including a lack of any required
substantiating documentation, or particular circumstance re quiring
special treatment, the insur ed, enrollee or subscriber, assignee of
the insured, enrollee or subscriber, and health care pro vider shall
be notified in writing within thirty (30) calendar days after
receipt of the claim by the insurer. The written notice shall
specify the portion of the claim that is causing a delay in
processing and explain any additional information or correc tions
needed. Failure of an insurer to provide the insured, enrollee or
subscriber, assignee of the insured, enrollee or su bscriber, and
health care provider w ith the notice shall constitute prima facie
evidence that the claim will be paid in accordance w ith the terms of
the policy. Provided, if a claim is not submitted into the system
due to a failure to meet basic Electroni c Data Interchange (EDI)
and/or Health Insurance Portability and Accountability Act (HIPAA)
edits, electronic notification of the fa ilure to the submitter shall
be deemed compliance with this subsection. Provided further, health
maintenance organizations shall not be required to notify the
insured, enrollee or subscriber, or assignee of the insured,
enrollee or subscriber of any claim defect or impropriety.
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D. Upon receipt of the additional information or corrections
which led to the claim ’s being delayed and a determination that the
information is accurate, an insurer shall either pay or deny the
claim or a portion of the claim withi n forty-five (45) calendar days
for a paper claim and thirty (30) calenda r days for an electronic
claim.
E. Payment shall be considered made on:
1. The date a draft or other valid instrument which is
equivalent to the amount of the payment is placed in t he United
States mail in a properly addressed, postpaid envelope; or
2. If not so posted, the date of delivery.
F. An overdue payment shall bear simple intere st at the rate of
ten percent (10%) per year.
G. In the event litigation should ensue based upo n such a
claim, the prevailing party shall be entitled to recover a
reasonable attorney fee to be set by the court and taxed as costs
against the party or parti es who do not prevail.
H. The Insurance Commissioner shall develop a standardized
prompt pay form for use by providers in reporting violations of
prompt pay requirement s. The form shall include a requirement that
documentation of the reason for the delay in payment or
documentation of proof of payment must be provided within ten (10)
days of the filing of the form. The Commissioner shall provide the
form to health maintenance organizations and providers.
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I. The provisions of this section shall not apply to the
Oklahoma Life and Health Insurance Guaranty Association or to the
Oklahoma Property and Casualty Insurance Guaranty Association.
SECTION 8. AMENDATORY 36 O.S. 2011, Section 1250.5, as
amended by Section 1, Chapter 105, O.S .L. 2012 (36 O.S. Supp. 2020,
Section 1250.5), is amended to read as follows:
Section 1250.5. Any of the following acts by an insurer, if
committed in violation of Sect ion 1250.3 of this title, constitutes
an unfair claim settlement practice exclusive of paragraph 16 of
this section which shall be applicable solely to health benefit
plans:
1. Failing to fully disclose to first party claimants,
benefits, coverages, or ot her provisions of any insurance policy or
insurance contract when the benefits, coverag es or other provisions
are pertinent to a claim;
2. Knowingly misrepresenting to claimants pertinent facts or
policy provisions relating to coverages at issue;
3. Failing to adopt and implement reasonable standards for
prompt investigations of claims ari sing under its insurance policies
or insurance contracts;
4. Not attempting in good faith to effectuate prompt, fair and
equitable settlement of claims submitted in whi ch liability has
become reasonably clear;
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5. Failing to comply with the provisions of Section 1219 of
this title;
6. Denying a claim for failure to exhibit the property without
proof of demand and unfounded refusal by a claimant to do so;
7. Except where there is a time limit specified in the policy,
making statements, written or otherwis e, which require a claimant to
give written notice of loss or proof of loss within a specif ied time
limit and which seek to relieve the company of its obligations if
the time limit is not complied with unless the failure to comply
with the time limit preju dices the rights of an insurer;
8. Requesting a claimant to sign a release that extends be yond
the subject matter that gave rise to the claim payment;
9. Issuing checks or, drafts or electronic payment in partial
settlement of a loss or claim under a spe cified coverage which
contain language releasing an insurer or its insured from its total
liability;
10. Denying payment to a claimant on the grounds that services,
procedures, or supplies provided by a treating physici an or a
hospital were not medically necessary unless the health insurer or
administrator, as defined in Section 1442 of this t itle, first
obtains an opinion from any provider of health care licensed by law
and preceded by a medical examination or claim rev iew, to the effect
that the services, procedures or supplies for which pay ment is being
denied were not medically necessary. Upon written request of a
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claimant, treating physician, or hospital, the opinio n shall be set
forth in a written report, prepared and signed by the reviewing
physician. The report shall detail which spec ific services,
procedures, or supplies were not medi cally necessary, in the opinion
of the reviewing physician, and an explanation of that conclusion.
A copy of each report of a rev iewing physician shall be mailed by
the health insurer, or administrator, postage prepaid, to the
claimant, treating physician or hospital requesting same within
fifteen (15) days after receipt of the writ ten request. As used in
this paragraph, “physician” means a person holding a valid lic ense
to practice medicine and surgery, osteopathic medicine, podiatric
medicine, dentistry, chiropractic, or optometry, pursuant to the
state licensing provisions of Tit le 59 of the Oklahoma Statutes;
11. Compensating a reviewing physician, as defined in paragraph
10 of this subsection, on th e basis of a percentage of the amount by
which a claim is reduced for payment;
12. Violating the provisions of the Health Care Fra ud
Prevention Act;
13. Compelling, without just ca use, policyholders to institute
suits to recover amounts due under its ins urance policies or
insurance contracts by offering s ubstantially less than the amounts
ultimately recovered in suits brought by the m, when the
policyholders have made claims for amou nts reasonably similar to the
amounts ultimately recovered;
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14. Failing to maintain a complete record of all complaints
which it has received during the preceding three (3) years or since
the date of its last financial examination conducted or accepted by
the Commissioner, whichever time is longer. This record shall
indicate the total number of complaints, their classification by
line of insurance, the nature of each complaint, the disposition of
each complaint, and the time it took to process each compla int. For
the purposes of this parag raph, “complaint” means any written
communication primarily expressing a grievance;
15. Requesting a refund of all or a portion of a payment of a
claim made to a claima nt or health care provider more than twenty -
four (24) months after the payment is made. This paragraph shall
not apply:
a. if the payment was made because of fraud committed by
the claimant or health care provider, or
b. if the claimant or health care pro vider has otherwise
agreed to make a refund to the insurer for overpayment
of a claim;
16. Failing to pay, or requesting a r efund of a payment, for
health care services covered under the policy if a health benefit
plan, or its agent, has provided a preaut horization or
precertification and verification of eligibility for those health
care services. This paragraph shall not appl y if:
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a. the claim or payment was made because of fr aud
committed by the claimant or health care provider,
b. the subscriber had a preexisting exclusion under the
policy related to the service provided, or
c. the subscriber or employer failed to pay the
applicable premium and all grace periods and
extensions of coverage have expired; or
17. Denying or refusing to accept an applicatio n for life
insurance, or refusing to renew, cancel, restrict or otherwise
terminate a policy of life insurance, or charge a d ifferent rate
based upon the lawful travel destinati on of an applicant or insured
as provided in Section 4024 of this title.
SECTION 9. AMENDATORY 36 O.S. 2 011, Section 1250.7, as
amended by Section 7, Chapter 95, O.S.L. 2018 (36 O.S. Supp. 2020,
Section 1250.7), is amended to read as follows:
Section 1250.7. A. Within sixty (60) days after receipt by a
property and casualty insurer of properly executed pro ofs of loss,
the first party claiman t shall be advised of the acceptanc e or
denial of the claim by the insurer, or if further i nvestigation is
necessary. No property and casualty insurer shall deny a clai m
because of a specific policy provision, condition , or exclusion
unless reference to s uch provision, condition, or exclus ion is
included in the denial. A denial shall be given to any claimant in
writing, and the claim file of the property and casualty in surer
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shall contain a copy of the denial. If there is a reasonable basis
supported by specific information available for review by the
Commissioner that the first party claimant has fraudulently caused
or contributed to the loss, a property and casualty i nsurer shall be
relieved from the requirements of t his subsection. In the event of
a weather-related catastrophe or a maj or natural disaster, as
declared by the Governor, the In surance Commissioner may extend the
deadline imposed under this subsection an additional twenty (20)
days.
B. If a claim is denied for reasons other than those desc ribed
in subsection A of this secti on, and is made by any other means than
writing, an appropriate notation shall be made in the claim file of
the property and casualty insurer until such time as a writ ten
confirmation can be made.
C. Every property and c asualty insurer shall complete
investigation of a claim within sixty (60) days after notifi cation
of proof of loss unless such investigation cannot reasonably be
completed within such time. If such inv estigation cannot be
completed, or if a property and c asualty insurer needs more time to
determine whether a claim should be accepted or denied, it shall so
notify the claimant within sixty (60) days after receipt of the
proofs of loss, giving reasons why more time is needed. If the
investigation remains inc omplete, a property and casualty in surer
shall, within sixty (60) days from the date of the initial
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notification, send to such claimant a letter setting forth the
reasons additional time is needed for i nvestigation. Except for an
investigation of possible fraud or arson which is supported by
specific information giving a reasonable basis for th e
investigation, the time for investigation shall not exceed one
hundred twenty (120) days after receipt of pro of of loss. Provided,
in the event of a weather -related catastrophe or a major natural
disaster, as declared by the Governor, the Insurance Comm issioner
may extend this deadline for investigation an additional twenty (20)
days.
D. Insurers shall not fail to settle first party claims on the
basis that responsibility for payment should be assu med by others
except as may otherwise be provided by pol icy provisions.
E. Insurers shall not continue or delay negotiations for
settlement of a claim directly with a claimant who is neither an
attorney nor represented b y an attorney, for a length of time which
causes the claimant’s rights to be affected by a statute of
limitations, or a policy or contract time limit, without giving the
claimant written notice that the time limit is expiring and may
affect the claimant’s rights. Such notice shall be given to first
party claimants not more than ninety (90) days and not less than
thirty (30) days, and to third party claimants not more than ninety
(90) days and not less t han sixty (60) days, before the date on
which such time limit may expire.
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F. No insurer shall make statements which indicate that the
rights of a third party claimant may be impaired if a form or
release is not completed w ithin a given period of time unle ss the
statement is given for the purpose of notifying a third party
claimant of the prov ision of a statute of limitations.
G. If a lawsuit on t he claim is initiated, the time limits
provided for in this section shall not apply.
SECTION 10. AMENDATORY 36 O.S. 2011, Section 1250.8, is
amended to read as follows:
Section 1250.8. A. If an insurance policy or insurance
contract provides for the adjustment and settlement of first party
motor vehicle total losses, on the basis of actual cash value or
replacement with another of like kind and quality, one of the
following methods shall apply:
1. An insurer may elect to offer a r eplacement motor vehicle
which is a specific comparable motor vehicle availab le to the
insured, with all applic able taxes, license fees, and other fees
incident to the transfer of evidence of ownershi p of the motor
vehicle paid, at no cost to the insured o ther than any deductible
provided in the policy. The offer and any rejection thereof shall
be documented in the claim file; or
2. An insurer may elect a cash sett lement based upon the actual
cost, less any deductible provided in the policy, to purchase a
comparable motor vehicle, including all applicable taxes, license
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fees and other fees incident to a transfer o f evidence of ownership,
or a comparable motor vehicl e. Such cost may be determined by:
a. the cost of a comparable motor vehicle in the local
market area when a comparable motor vehicle is
currently or recently available in the prior ninety
(90) days in the local market area,
b. one of two or more quotatio ns obtained by an insurer
from two or more qualified dealers located within the
local market area when a comparable motor vehicle is
not available in the local market ar ea, or
c. the cost of a comparable motor vehicle as quoted in
the latest edition of the National Automobile Dealers
Association Official Used Car Guide or monthly edition
of any other nationally recognized published
guidebook.
B. If a first party motor ve hicle total loss is settled on a
basis which deviates from the methods described in sub section A of
this section, the devia tion shall be supported by documentation
giving particulars of the condition of the motor vehicle. Any
deductions from such cost, in cluding, but not limited to, deduc tion
for salvage, shall be measurable, discernible, i temized and
specified as to dollar a mount and shall be appropriate in amount.
The basis for such settlement shall be fully explained to a first
party claimant.
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C. If liability for motor vehicle damages is reasonably clear,
insurers shall not recommend th at third party claimants make claims
pursuant to the third party claimants ’ own policies solely to avoid
paying claims pursuant to such insurer ’s insurance policy or
insurance contract.
D. Insurers shall not require a claimant to travel unreasonably
either to inspect a replacement motor veh icle, obtain a repair
estimate or have the motor vehicle repaired at a specific repair
shop.
E. Insurers shall, upon the request of a claimant, include the
deductible of a first party claimant, if any, in subrogation
demands. Subrogation recoveries shall be shared on a proportionate
basis with a first party c laimant, unless the deductible amount has
been otherwise recovered. No deduc tion for expenses shall be made
from a deductible recovery unless an outside attorney i s retained to
collect such recovery. The deduction shall then be made for only a
pro rata share of the allocated loss adjustment expense.
F. If an insurer prepares an estimate of the cost of automobile
repairs, such estimate shall be in an amount for whi ch it reasonably
may be expected that the damage can be repaired satisfactorily. An
insurer shall give a copy of an estimate to a claimant and may
furnish to the claima nt the names of one or more conven iently
located repair shops, if requested by the clai mant.
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G. If an amount claimed is re duced because of betterment or
depreciation, all informa tion for such reduction shall be contained
in the claim file. Such deduction s shall be itemized and specified
as to dollar amount and shall be appropriate for the amount of
deductions.
H. An insurer or its representative shall not require a
claimant to obtain motor vehicle repairs at a specific repair
facility. An insurer or its representative shall not require a
claimant to obtain motor vehicle glass repair or re placement at a
specific motor vehicl e glass repair or replacement facility. An
insurer shall fully and promptly pay for the cost of the motor
vehicle repair services or products, less any applicable ded uctible
amount payable according to the terms of the policy. The claimant
shall be furnished an itemized priced statement of repairs by the
repair facility at the time of acceptance of the repaired motor
vehicle. Unless a cash settlement is made, if a cl aimant selects a
motor vehicle repair or motor vehicl e glass repair or replacement
facility, the insurer shall provide payment to the facility or
claimant based on a competitive price, as established by that
insurer through market surveys or by the insured through competitive
bids at the insured’s option, to determine a fair and reasonable
market price for similar services. Reasonable deviation fr om this
market price is allowed based on the facts in each case.
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I. An insurer shall not use as a basis for ca sh settlement with
a first party claimant an amount w hich is less than the amount which
an insurer would pay if repairs were made, other than in total loss
situations, unless such amount is agreed to by the insured.
J. An insurer shall not force a claiman t to execute a full
settlement release in order to se ttle a property damage claim
involving a personal injury.
K. All payment or satisfaction of a claim for a motor vehicle
which has been transferred by title to the insur er shall be paid by
check or, draft or electronic payment, payable on demand.
L. In the event of payment of a total loss t o a third party
claimant, the insurer shall include any registered lienholder as
copayee to the extent of the lienholder ’s interest.
M. As used in this section, “total loss” means that the vehicle
repair costs plus the salvage value of the vehicle meets o r exceeds
the actual cash value of the motor vehicle pri or to the loss, as
provided in used automobile dealer guidebooks.
N. An insurer shall not offer a cash settlement as provided i n
paragraph 2 of subsection A of thi s section for the purchase of a
comparable motor vehicle and then subsequently sell the moto r
vehicle which has been determined to be a total loss back to the
claimant if the insurer has determined that the repair of the
vehicle would not result in the veh icle being restored to operative
condition as provided in Section 1111 of Title 47 of the Ok lahoma
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Statutes unless the claimant specifies in writing or via an
electronic signature that the claimant understands that the m otor
vehicle shall be titled as a “junked vehicle”.
SECTION 11. AMENDATORY 36 O.S. 2011, Section 143 5.2, as
last amended by Section 1, Chapter 88, O.S.L. 2018 (36 O.S. Supp.
2020, Section 1435.2), is amended to read as follows:
Section 1435.2. As used in the Oklahom a Producer Licensing Act:
1. “Commissioner” means the Insurance Commissioner;
2. “Business entity” means a corporation, association,
partnership, limited liability com pany, limited partnership, or
other legal entity;
3. “Customer service representative ” means an individual
appointed by an insurance producer, surplus lines insurance broker,
managing general agent, or insurance agency to assist the insurance
producer, broker, or agency in transacting the bus iness of insurance
from the office of the insuran ce producer, broker, or agency and
whose salary may vary based o n the production or volume of
applications or premiums;
4. “Home state” means the District of Columbia a nd any state or
territory of the Unite d States in which an insurance producer
maintains the producer’s principal place of residence or principal
place of business and is licensed to a ct as an insurance producer;
5. “Insurance” means any of the lines of au thority in this
title, including worke rs’ compensation insurance. Any insurer
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approved to offer workers’ compensation insurance may appoint
insurance producers. All producers appoin ted for workers’
compensation insurance products must be licensed as insu rance
producers by the Oklahoma Insura nce Department;
6. “Insurance consultant ” means an individual or legal entity
who, for a fee, is held out to the public as engaged in the busine ss
of offering any advice, counsel, opinion or service with respect to
the benefits, advantages, or disadvantag es promised under any policy
of insurance that co uld be issued or delivered in this state;
7. “Insurance producer” means a person required to be licensed
under the laws of this state to sell, solicit or negotiate
insurance. Any person not duly licensed a s an insurance producer,
surplus lines insurance broker, or limited lines producer who
solicits a policy of insur ance on behalf of an insurer or other
licensees authorized under the Insurance Code shall be deemed to be
acting as an insurance agent within the meaning of the Oklahoma
Producer Licensing Act , and shall thereby become liable for all the
duties, requirements, liabilities, and penalties t o which an
insurance producer of the company is subject, and the company by
issuing the policy of insurance shall thereby ac cept and acknowledge
the person as its agent in the transaction. For purposes of the
laws of this state and the Oklahoma Insurance Code, the term
“insurance agent” means an insurance producer properly app ointed by
an insurance carrier or properly licensed entity to act as an agent
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for that insurance carrier or entity, pursuant to Section 1435.15 of
this title;
8. “Insurer” has the meaning set out in Section 103 of this
title;
9. “License” means a document issued by the Insurance
Commissioner of this stat e authorizing a person to act as an
insurance producer for the lines of authorit y specified in the
document. The license itself doe s not create any authority, actual,
apparent or inherent, in the holder t o represent or commit an
insurance carrier;
10. “Limited line credit insurance ” includes credit life,
credit disability, credit pr operty, credit unemp loyment, involuntary
unemployment, mortgage life, mortgage guaranty, mortgage disability,
guaranteed automobile protection insurance, known as “gap”
insurance, and any other form of insurance offered in connection
with an extension of c redit that is limite d to partially or wholly
extinguishing that credit obligation that the Insurance Commissioner
determines should be designated a form of limited line credit
insurance;
11. “Limited line credit insurance producer” means a person who
sells, solicits or negot iates one or more forms of limit ed line
credit insurance coverage to individuals through a master,
corporate, group or individual policy;
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12. “Limited lines insurance” means limited line cred it and
those lines of insurance defined in S ection 1435.20 of th is title or
any other line of in surance the Insurance Commissioner deems
necessary to recognize for the p urposes of complying with subsection
E of Section 1435.9 of this title;
13. “Limited lines producer” means a person who is authori zed
by the Commissioner to sell, solicit or negotiat e limited lines
insurance. For purposes of the laws of this state and th e Oklahoma
Insurance Code, the term “limited insurance representative” shall
have the same meaning as the term “limited lines producer”;
14. “Managing general agent” means an individual or legal
entity appointed, as an independent contractor, by one or mo re
insurers to exercise general supervision over th e business of the
insurer in this state, with authority to appoint insurance pro ducers
for the insurer, and to terminate appointment s for the insurer;
15. “Negotiate” means the act of conferring directly with or
offering advice directly to a purchaser or prospective purchaser of
a particular contract of insurance concerning any of th e substantive
benefits, terms or conditions of the c ontract, provided that the
person engaged in that act either sells insura nce or obtains
insurance from insurers for purchase r;
16. “Person” means an individual or a business entity;
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17. “Sell” means to exchange a contract of insurance, by any
means, for money or its equivalent, on behalf of an insurance
company;
18. “Solicit” means attempting to sell insurance or asking or
urging a person to apply for a partic ular kind of insurance from a
particular company;
19. “Surplus lines insurance broker ” means an individual or
legal entity who solicits, negotiates, or procures a polic y of
insurance in an insurance company not licensed to transact business
in this state which cannot be procured from insurers licen sed to do
business in this state. All transactions under such license shall
be subject to Article 11 of the Oklahoma Insuran ce Code;
20. “Terminate” means the cancellation of the relationship
between an insurance producer and the insurer or the terminati on of
a producer’s authority to transact insurance;
21. “Uniform Business Entity Application ” means the current
version of the National Association of Insurance Commissioners
(NAIC) Uniform Business Entity Appli cation for resident and
nonresident business entities; and
22. “Uniform Application” means the current version of the NAIC
Uniform Application for resident and nonresid ent producer licensing.
SECTION 12. AMENDATORY 36 O.S. 2011, Section 1435.20, as
last amended by Section 1, Chapter 263, O.S. L. 2019 (36 O.S. Supp.
2020, Section 1435.20), is amended to read as follows:
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Section 1435.20. A. A limited lines producer may receive
qualification for a license in one or more of the follow ing
categories:
1. Prepaid legal liability insuranc e, which means the
assumption of an enforcea ble contractual obligation to provide
specified legal services or to reim burse policyholders for specified
legal expenses, pursuant to the provisions of a group or individual
policy;
2. Crop - insurance providing protection against damage to
crops from unfavorable weather conditions, fire or lightning, flood,
hail, insect infestation, disease or other yield -reducing conditions
or perils provided by the private i nsurance market, or that is
subsidized by the Federa l Crop Insurance Corporation, including
Multi-Peril Crop Insurance;
3. Car rental - insurance offered, sold or solic ited in
connection with and incidental to th e rental of rental cars for a
period of two (2) years, whether at the rental office or by
preselection of coverage in master, corporate, gr oup or individual
agreements that:
a. is nontransferable,
b. applies only to the rental car that is the subject of
the rental agreement, and
c. is limited to the following kinds of insurance:
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(1) personal accident insurance for renters and other
rental car occupants, for accidental death or
dismemberment, and for medical expens es resulting
from an accident that occurs wi th the rental car
during the rental period,
(2) liability insurance that provides protection to
the renters and other authorized drivers of a
rental car for liability arising from the
operation or use of the rent al car during the
rental period,
(3) personal effects insurance that provides coverage
to renters and other vehicle occupants for loss
of, or damage to, personal effects in the rental
car during the rental period,
(4) roadside assistance and emergency sick ness
protection insurance, or
(5) any other coverage designated by the Insurance
Commissioner.
A car rental limited lines license issued to a rental or leasing
company shall authorize any employee or authorized representative of
the rental or leasing compa ny to sell or offer coverage at each
location at which the rental or leasing company op erates. Employees
or authorized representatives are not required to be individually
licensed;
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4. Credit - credit life, credit disability, credit property,
credit unemployment, involuntary unemployment, mortgage life,
mortgage guaranty, mortgage disabilit y, guaranteed automobile
protection insurance, or an y other form of insurance offered in
connection with an extension of credit that is limited to partially
or wholly extinguishing that credit obligation and that is
designated by the Insurance Commissioner as limited line credit
insurance;
5. Surety - insurance or bond that covers obligations to pay
the debts of, or answer for the default of another, including
faithlessness in a position of public or private trust . For purpose
of limited line licensing, s urety does not include surety bail
bonds;
6. Travel; and
7. Self-service storage insurance, pu rsuant to Section 2 of
this act 1435.20a of this title; and
8. Motor Service Club limited lines producer , pursuant to
Sections 3101 et seq. of this title.
B. 1. An insurance producer or limited lines producer may
solicit applications for and issue trave l accident policies or
baggage insurance by means of mechanical vending m achines supervised
by the insurance producer or l imited lines producer only if the
Insurance Commissioner shall determine that the form of policy to be
sold is reasonably suited for s ale and issuance through vending
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machines, that use of vending machines f or the sale of policies
would be of convenience t o the public, and that the type of ven ding
machine to be used is reasonably suitable and practical for the sale
and issuance of polici es. Policies so sold do not have to be
countersigned.
2. The Commissioner shall issue to the insurance agent or
limited insurance representative a special ven ding machine license
for each such machine to be used. The license s hall specify the
name and address of the insurer and licensee, the kind of insurance
and type of policy to be sold, and the place where the machine i s to
be in operation. The license sha ll expire, be renewable, and be
suspended or revoked coincidentally w ith the insurance agent lic ense
or limited representative license of the licensee. The license fee
for each vending machine shall be that stated in the provisions of
Section 1435.23 of t his title. Proof of existence of the license
shall be displayed on o r about each machine in suc h manner as the
Commissioner may reasonably require.
SECTION 13. AMENDATORY 36 O.S. 2011, Sectio n 1445, is
amended to read as follows:
Section 1445. A. All insurance charges or premiums collected
by an administrator for an insure r or trust and all return premiums
received from the insurer o r trust shall be held by the
administrator in a fiduc iary capacity. These funds shall be
immediately remitted to the person entitled to the funds or shall be
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deposited promptly in a fiduciary b ank account established and
maintained by the administrator.
B. If charges or premiums deposited in a fiduciary ac count have
been collected for more than one i nsurer or trust, the administrator
shall keep records showing the deposits to and withdrawals fr om the
account for each insurer or trust. The administrator, upon request
of an insurer or trust, shall furnish co pies of the records
pertaining to deposits to and withdrawals from the account for that
insurer or trust.
C. The administrator shall not pay any claim by withdrawals
from a fiduciary account unless prov isions for said withdrawals are
included in the writt en agreement between the insurer or trust and
the administrator. The written agreement shall authorize
withdrawals by the administrator from the fiduciary account only
for:
1. remittance to an insurer or trust entitled to a remittance;
or
2. deposit in an account maintained in the name of an insur er
or trust; or
3. transfer to and deposit in an account established for
payment of claims, as provided for by subsection D of this section;
or
4. payment to a group policyholder for remittance to the
insurer or trust entitled to such remittance; or
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5. payment of commission, fees, or charges to the
administrator; or
6. remittance of return premiu ms to the person entitled to such
return premiums.
D. All claims paid by the administrator from funds collected on
behalf of the insurer or trust shall be paid on drafts or, checks or
electronic payment authorized by the insurer or trust.
SECTION 14. AMENDATORY 36 O.S. 2011, Section 1450, as
amended by Section 6, Chapter 294, O.S.L. 2019 (36 O.S. Supp. 2020,
Section 1450), is amended to read as follows:
Section 1450. A. No person shall act as or present himself or
herself to be an administrator, as defined by the provisions of the
Third-party Administrator Act, in this state, unless the person
holds a valid license as an administrator which is issued by the
Insurance Commissioner.
B. An administrator shall not be eligible for a n onresident
administrator license under this section if the administrator does
not hold a home state certificate of authority or license in a state
that has adopted the Third-party Administrator Act or that applies
substantially similar provisions as are co ntained in the Third-party
Administrator Act to that admini strator. If the Third-party
Administrator Act in the administrat or’s home state does not extend
to stop-loss insurance, but if the home state otherwise applies
substantially similar provisions as are contained in the Third -party
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Administrator Act to that administrator, then that omission shall
not operate to disqualify the administrator from receiving a
nonresident administrator license in this state.
1. “Home state” means the United States jurisd iction that has
adopted the Third-party Administrator Act o r a substantially similar
law governing third-party administrators and which has been
designated by the administrator as its principal regulator. The
administrator may designate either its state o f incorporation or its
principal place of business within t he United States if that
jurisdiction has adopted the Third -party Administrator Act or a
substantially similar law governing third -party administrators. If
neither the administrator ’s state of incorporation nor its principal
place of business within the U nited States has adopted the Third -
party Administrator Act or a s ubstantially similar law governing
third-party administrators, then the third -party administrator shall
designate a United States ju risdiction in which it does business and
which has adopted the Third-party Administrator Act or a
substantially similar law governing third-party administrators. For
purposes of this definition paragraph, “United States jurisdiction ”
means the District of Columbia or a state or territory of the United
States.
2. “Nonresident administrator” means a person who is applying
for licensure or is licensed in any state other than the
administrator’s home state.
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C. In the case of a partnership which has been lice nsed, each
general partner shall be named in the license licensed and shall
qualify therefore as though an individual licens ee. The
Commissioner shall charge a full additional license fee and a
separate license shall be issued for each individual so named in
such a license. The partnership shall notify the Commi ssioner
within fifteen (15) thirty (30) days if any individual li censed on
its behalf has been termin ated, or is no longer associated with or
employed by the partnership. Any entity or partnership person
making application as an administrator or currently licensed as
administrators an administrator under the Third-party Administrators
Act shall provide a National Association of Insurance Commissioner
(NAIC) Biographical Affidavits Affidavit and a comprehensive review
of the background report by an independ ent third-party NAIC-approved
vendor as required for domestic ins urers pursuant to the insurance
laws of this state.
D. An application for an administrator ’s license shall be in a
form prescribed by the Commissioner and shall be accompanied by a
fee of One Hundred Dollars ($100.00). This fee shall not be
refundable if the application is denied or refuse d for any reason by
either the applicant or the Commissioner.
E. The administrator ’s license shall continue in force no
longer than twelve (12) months fro m the original month of issuance.
Upon filing a renewal form pre scribed by the Commissioner,
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accompanied by a fee of One Hundred Dollars ($100.00), the license
may be renewed annually for a one -year term. Late application for
renewal of a license shall r equire a fee of double the amount of the
original license fee. T he administrator shall submit, toget her with
the application for renewal, a list of the names and addresses of
the persons with whom the administrator has contracted in accordance
with Section 1443 of this title. The Commissioner shall hold this
information confidential except as provided i n Section 1443 of this
title.
F. 1. The administrator ’s license shall be issued or renewed
by the Commissioner unless, after notice and opportunity for
hearing, the Commissioner determines that the administrator is not
competent, trustworthy, or financia lly responsible, or has had any
insurance license denied for cause by any state, has been convic ted
or has pleaded guilty or nolo contendere to any felony or to a
misdemeanor involving moral turpitude or dishonesty.
2. The administrator shall report to th e Insurance Commissioner
any administrative or criminal action taken against the
administrator in another jurisdiction or by another governmental
agency in this state within thirty (30) calendar days of the final
disposition of the matter. This report sha ll include a copy of the
order, consent to order, copy of any payment required as a result of
the administrative or criminal action, or other relevant lega l
documents.
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3. Any entity making application to the Oklahoma In surance
Department as a third -party administrator (TPA) or within thirty
(30) days of a change for a licensed TPA shall provide curr ent
National Association of Insurance Commissioners (NAIC) Biographical
Affidavits and independent third -party background reports from a
NAIC-approved vendor on behalf of all officers, directors and key
managerial personnel of the TPA, and individuals with a ten percent
(10%) or more beneficial ownership in the TP A and the TPA’s ultimate
controlling person (affiant) as required for insurers pursuant to
the laws of this state.
G. After notice and opportunity for hearing, and upon
determining that the admini strator has violated any of the
provisions of the Oklahoma Insurance Code or upon finding reasons
for which the issuance or nonrenewal of such license could hav e been
denied, the Commissioner may either suspend or revoke an
administrator’s license or assess a civil penalty of not more than
Five Thousand Dollars ($ 5,000.00) for each occurrence. The payment
of the penalty may be enforced in the same manner as civi l judgments
may be enforced.
H. Any person who is acting as or presenting himself or herself
to be an administrator without a valid license shall be subje ct,
upon conviction, to a fine of not less than One Thousand Doll ars
($1,000.00) nor more than Ten Th ousand Dollars ($10,000.00) for each
occurrence. This fine shall be in addition to any other pe nalties
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which may be imposed for violations of the Oklahoma Insurance Code
or other laws of this state.
I. Except as provid ed for in subsections F and G of thi s
section, any person convicted of violating any provisions of the
Third-party Administrator Act shall be guilty of a misdemeanor and
shall be subject to a fine of not more than One Thousand Dollars
($1,000.00).
SECTION 15. AMENDATORY 36 O.S. 2011, Section 2006, as
amended by Section 1, Chapter 78, O.S.L. 2014 (36 O.S. Supp. 2020,
Section 2006), is amended to read as follows:
Section 2006. A. The business and functions of the Oklahoma
Property and Casualty Insurance Guaranty Assoc iation shall be
managed and administered by a board of twelve (12) directors
composed of two members selected by the American Insurance
Association who are member insurers; at the expiration of the terms
of the members selected by the Alliance of American Insurers who are
serving on November 1, 2014, two members selected by the Property
and Casualty Insurers Association of America who are member
insurers; at the expiration of the terms of the members selected by
the National Association of Independent Insur ers who are serving on
November 1, 2014, two members selected by the National Association
of Mutual Insurance Companies who are member insurers; two Oklaho ma
domestic insurers who are member insurers; two nonaffiliated f oreign
or alien insurers who are mem ber insurers; two insurance agents who
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shall serve as ex officio members on the board domestic, foreign and
alien insurers who are member insurers, includi ng a minimum of two
domestic insurers, and two insurance agents w ho shall serve as ex
officio members. In determining candidates to fill the member
insurer positions, the board shall consider whet her all insurers are
fairly represented, including workers ’ compensation insurers and
other property and casualty insurers . One of the ex officio members
shall be the Executive Director of the Independent Insurance Agents
of Oklahoma, Inc.; the other ex o fficio member shall be a licensed,
resident property and ca sualty insurance agent chosen by the
Governor. Each member of th e board of directors shall designate a
full-time salaried employee to represent it on the board of
directors. Each member except fo r the ex officio members shall
serve for a term of two (2) years. The ex officio member who is
appointed by the Governor sh all serve at the pleasure of the
Governor. Each appointed member insurer representative may
designate an alternate representative t o represent the insurer at
any meeting of the board. Any p erson serving as an alternate
representative shall, while serving , have all the powers and
responsibilities of the appointed insurer representative. The
members of the board of directors except fo r the ex officio members
shall be subject to approval by th e Insurance Commissioner.
Vacancies on the board except for the ex officio members shall be
filled for the remaining period of the term by a majority vote of
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the remaining board members, subject t o the approval of the
Commissioner. If no members are sele cted and appointed within sixty
(60) days after the effective dat e of this act, the Commissioner may
appoint the initial members of the board of directors .
B. In approving selections to the board, the Commissioner shall
consider, among other things, wheth er all member insurers are fairly
represented.
C. Members of the board shall serve without compensat ion but
may be reimbursed from the assets of the Association for expenses
incurred by them as me mbers of the board of directors.
SECTION 16. AMENDATORY 36 O.S. 2011, Section 2007, is
amended to read as follows:
Section 2007. A. T he Oklahoma Property and Casualty Insurance
Guaranty Association shall:
1. Be obligated to pay the covered claims existing prior to the
determination of insolvency if the claims arise within thirty (30)
days after the determination of insolvency, or befor e the policy
expiration date if less than thirty (30) days after the
determination, or before th e insured replaces the policy or causes
its cancellation, if the insured does so within thirty (30) days of
the determination. The obligation shall be satisfie d by paying to
the claimant an amount as follows:
a. the full amount of a covered claim for bene fits under
a workers’ compensation insurance coverage,
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b. an amount not exceeding Ten Thousand Dollars
($10,000.00) per poli cy for a covered claim for the
return of unearned premium, and
c. an amount not exceeding One Hundred Fifty Thousand
Dollars ($150,000.00) per claimant for all other
covered claims.
In no event shall the Association be obligated to pay a claimant
an amount in excess of the obligation of the insolvent insurer under
the policy or coverage from which the claim arises or in excess of
the limits of the obligation of the Association existing on the date
on which the order of liquidation is filed with the court cl erk;
2. Any obligation of the assoc iation to defend an insured shall
cease upon the payment or tender by the association of an amou nt
equal to the lesser of the covered claim obligation limi t of the
association or the applicable policy limit;
3. Be deemed the insurer to the extent of the o bligations on
covered claims and to that extent subject to the limitations
provided in the Oklah oma Property and Casualty Insurance Guaranty
Association Act shall have all rights, duties and obligations of the
insolvent insurer as if the insurer had not be come insolvent,
including, but not limited to, the right to pursue and retain
salvage and subrogation recoverable on covered claim obligations to
the extent paid by the association. The association shall not be
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deemed the insolvent insurer for the purpose of conferring
jurisdiction;
4. Allocate claims paid and expenses incurred among the three
accounts set out in Section 2005 of this title separately, and
assess member insurers separately for each account amounts necess ary
to pay the obligations of the As sociation under this section
subsequent to a member insurer becoming an insolvent insurer, the
expenses of handling covered claims subsequent to an insolve ncy, and
other expenses authorized by the Oklahoma Property and C asualty
Insurance Guaranty Associati on Act, Sections 2001 through 2020 of
this title and Sections 14 2020.1 and 15 2020.2 of this act title.
The assessments of each member insurer shall be i n the proportion
that the net direct written premiums of the memb er insurer for the
calendar year preceding the assessment on the kinds of insurance in
the account bear to the net direct written pr emiums of all
participating insurers for the calendar year preceding the
assessment on the kinds of insurance in the account . Each member
insurer shall be noti fied in writing of the assessment not later
than thirty (30) days before it is due. No member i nsurer may be
assessed in any year an amount greater than t wo percent (2%) of the
net direct written premiums of that member or one percent (1%) of
that surplus of the member insurer as regards policyholders for the
calendar year preceding the assessment o n the kinds of insurance in
the account, whichever is less. If the maximum assessment, together
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with the other assets of th e Association, does not provide in a ny
one (1) year in any account an amount sufficient to make all
necessary payments from that acc ount, the funds available may be
prorated and the unpaid po rtion shall be paid as soon thereafter as
funds become available. The Association shall pay claims i n any
order which it deems reasonable, including the payment of claims as
the claims are receive d from the claimants or in groups or
categories of claims. The Association may exempt or defer, in whole
or in part, the assessment of any member insurer, if t he assessment
would cause the financial statement of the member insurer to reflect
amounts of capital or surplus less than the minimum amounts required
for a certificate of authority by any jurisdiction in which the
member insurer is authorized to transact insurance. During the
period of deferment, no dividends shall be paid to shareholders or
policyholders. Deferred assessments shall be paid when the paym ents
will not reduce capital or surplus below required minimums. The
payments may be refunded to tho se companies receiving larger
assessments by virtue of the deferment, or, at the election of any
company credited against future assessments. Each member insurer
serving as a servicing facility may set off against any a ssessment
authorized payments made o n covered claims and expenses incurred in
the payment of covered claims by a member insurer if t hey are
chargeable to the account for which the assessment is made;
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5. Investigate claims brought against the Association a nd
adjust, compromise, settle and pa y covered claims to the extent of
the obligation of the Association and deny all other claims. The
Association shall pay claims in any order that it may d eem
reasonable, including, but not limited to, the payment of cla ims as
they are received from claima nts or in groups of categories of
claims. The Association shall have the right to select and to
direct legal counsel under liability insurance policies fo r the
defense of covered claims;
6. Notify claimants in this sta te as deemed necessary by the
Commissioner and upon the request of the Commissioner, to the extent
records are available to the Asso ciation;
7. a. Handle claims through employees or through o ne or more
insurers or other persons incorporated and resident in
the State of Oklahoma designated as servicing
facilities. Designation of a servicing facility is
subject to approval of the Commis sioner, but such
designation may be declined by a member in surer.
b. The Association shall have the right to review and
contest as set forth in this paragraph, settlements,
releases, compromises, waivers and judgments to which
the insolvent insurer or its insureds were parties
prior to the entry of the order of li quidation. In an
action to enforce settlements, releases and jud gments
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to which the insolvent insure r or its insureds were
parties prior to the entry of the order of
liquidation, the Association s hall have the right to
assert the following defenses:
(1) the Association shall not be bound by a
settlement, release, compr omise or waiver
executed by an insur ed or the insurer, or any
judgment entered against the insured or the
insurer by consent or thro ugh a failure to
exhaust all appeals, if the settlement, re lease,
compromise waiver or judgment was:
(a) executed or entered within one hundred
twenty (120) days prior to the entry of an
order of liquidation, and the insured or the
insurer did not use reas onable care in
entering into the settlement, release,
compromise, waiver or judgment, or did not
pursue all reasonable appea ls of an adverse
judgment, or
(b) executed by or taken against an insured or
the insurer based on default, fraud,
collusion or the failure of the insurer to
defend,
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(2) if a court of competen t jurisdiction finds that
the Association is not bound by a settl ement,
release, compromise, waiver o r judgment for the
releases provided for in division (1) of
subparagraph b of this paragraph, th e settlement,
release, compromise, waiver or judgment shall be
set aside and the Association shall be permitted
to defend any covered claim on the merits. The
settlement, release, compromise, waiver or
judgment shall not be considered as evidence of
liability in connection with any claim brought
against the Association or any other party
pursuant to the Oklahoma Property and C asualty
Insurance Guaranty Associati on Act, and
(3) the Association shall have the right to assert
any statutory defenses or rights of offset
against any settlement, release, compromise or
waiver executed by an insured or the insurer, or
any judgment taken against the insured or the
insurer.
c. As to any covered claims arising from a judgment under
any decision, verdict or finding base d on the default
of the insolvent insurer or its failure to defend, the
Association, either on its own behalf or on behalf o f
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an insured, may apply to have the judgment, order,
decision, verdict or finding set aside by the same
court or administrator that entered the judgment,
claim, decision, verdict or finding a nd shall be
permitted to defend on the merits;
8. Reimburse each servicing facility for obligations of the
Association paid by the facility and for reasonable expenses
incurred by the facility whi le handling claims on behalf of the
Association and pay the other expenses of the Association authorized
by the Oklahoma Property and Casualty Insurance Guarant y Association
Act; and
9. Have standing to appear before any court of this state which
has jurisdiction over an impaired or insolvent insurer for whom the
Association is or may become obligated pursuant to the provision s of
the Oklahoma Property and Casua lty Insurance Guaranty Association
Act. Standing shall extend to all matters germane to the pow ers and
duties of the Association including, but not limite d to, proposals
for rehabilitation, acquisition, merger, reinsuri ng, or guaranteeing
the covered policies of the impaired or insolvent insurer, and the
determination of covered policies and contrac tual obligations of the
impaired or insolvent insurer.
B. The Association may:
1. Employ or retain persons as are necessar y to handle claims
and perform other duties of the Association;
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2. Borrow funds necessary to effect the purposes of the
Oklahoma Property and Casualty Insurance Guaranty Association Act in
accordance with the plan of operation;
3. Sue or be sued;
4. Negotiate and become a party to contrac ts as are necessary
to carry out the purpose of the Oklahoma Property and Casualty
Insurance Guaranty Association Act;
5. Refund to member insurers in pro portion to the contribution
of each member insurer that amount by which the assets of the
Association exceed its liabilities, if at the end of any calendar
year the board of directors finds that th e assets of the Association
exceed the liabilities as estim ated by the board of directors for
the coming year;
6. Lend monies to an insurer declared to be impa ired by the
Commissioner. The Association, with approval of the Commissioner,
shall approve the amount, length and terms of the loan. “Impaired
Insurer” for purposes of this paragraph section shall mean an
insurer potentially unable to fulfill its contra ctual obligations,
but shall not mean an insolvent insurer;
7. Perform other acts as are necess ary or proper to effectuate
the purpose of the Oklahoma Pro perty and Casualty Insurance Guaranty
Association Act;
8. Intervene as a party in interest in any su pervision,
conservation, liquidation, rehabilitation, impairment or
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receivership in which policy holders’ interests and interests of the
Association may be or are affected; and
9. Be designated or may contract as a servi cing facility for
any entity which may be recommended by the board of directors of the
Association and shall be approved by the Comm issioner.
SECTION 17. AMENDATORY 3 6 O.S. 2011, Section 2023, as
amended by Section 2, Chapter 384, O.S.L. 2019 (36 O.S. Supp. 2020,
Section 2023), is amended to read as follows:
Section 2023. A. There is created a nonprofit legal entity to
be known as the Oklahoma Life and Health Insuran ce Guaranty
Association. All member insurers shall be and remain members of the
Association as a con dition of their authority to transact insurance
as a or health maintenance organization business in this state.
B. The Association shall perform its funct ions under a plan of
operation established and approved in accord ance with this act and
shall exercise its powers through the Board of Directors established
in this act. For purposes of administra tion and assessment, the
Association shall maintain three a ccounts:
1. The health account;
2. The life insurance account; and
3. The annuity account.
C. The Association shall come under the immediate supervision
of the Insurance Commissioner and shall be subject to the applicable
provisions of the insurance la ws of this state.
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SECTION 18. AMENDATORY 36 O.S. 2011, Section 3101, is
amended to read as follows:
Section 3101. The words and phrases as As used in this act,
unless a different meaning is plainly required by the context, shall
have the following meanings:
1. “Commissioner” means the Commissioner of Insurance, his or
her assistants or deputies, or other persons authorized to act for
him. or her;
2. “Company” means any person, firm, copartnership, company,
association or corporat ion engaged in selling, furnishing or
procuring, either as princi pal or agent producer, for a
consideration, motor club service .;
3. “Agent” “Producer” means a limited insurance representative
who solicits the purchase o f service contracts or transmits fo r
another any such contract, or application therefor, to or from the
company, or acts or aids in any manner in the delivery or
negotiation of any such co ntract, or in the renewal or continuance
thereof. This, however, sh all not include any person performi ng
only work of a clerical nature in the office of the motor club .;
4. “Towing service” means any act by a company which consists
of towing or moving a motor vehicle from one place to another unde r
other than its own pow er.;
5. “Emergency road service ” means any act by a company to
adjust, repair or replace the equipm ent, tires or mechanical parts
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of a motor vehicle so it may operate under its own power; or
reimbursement of expenses incurred by a member when his or her motor
vehicle is unable to operate u nder its own power.;
6. “Insurance service” means any act to sel l or give to the
holder of a service contract or as a result of membership in or
affiliation with a company a policy of insurance co vering the holder
for liability or loss for personal injury or property damage
resulting from the ownership, maintenance, op eration or use of a
motor vehicle.;
7. “Bail bond service” means any act by a company t o furnish or
procure a cash deposit, bond or other undertaking requi red by law
for any person accused o f a law violation of this state, pending the
trial.;
8. “Discount service” means any act by a compan y resulting in
special discounts, rebates or reducti ons of price on gasoline, oil,
repairs, insurance, parts, accessorie s or service for motor vehicles
to holders of service contracts.;
9. “Financial service” means any act by a company to loan or
otherwise advance monies, with or without security, to a ser vice
contract holder.;
10. “Buying and selling service” means any act by a company to
aid the holder of a service contract in the purchase or sale of an
automobile.;
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11. “Theft service” means any act by a company to locate,
identify or recover a stolen o r missing motor vehicle owned or
controlled by the holder of a servi ce contract or to detect or
apprehend the person guilty of such theft .;
12. “Map service” means any act by a company to furnish road
maps without cost to holders of service contracts .;
13. “Touring service” means any act by a comp any to furnish
touring information without cost to holders of service contracts.;
14. “Legal service” means any act by a co mpany to furnish to a
service contract holder, without cost, the services of an attorney .;
15. “Motor club service” means the rendering, furnishing or
procuring of, or reimbursement for, tow ing service, emergency road
service, insurance service, bail bond service, legal service,
discount service, financial service, buying and selling service ,
theft service, map service, touring servic e, or any three or more
thereof, to any person, in connecti on with the ownership, operation,
use or maintenance of a motor v ehicle by such person , that has
membership, for consideration.; and
16. “Service contract” means any written agreement whereby any
company, for a considera tion, promises to render, furnish o r procure
for any person motor club service.
SECTION 19. AMENDATORY 36 O.S. 2011, Section 3105, is
amended to read as follows:
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Section 3105. A. Each motor service club op erating in this
state pursuant to certificate of authority issued hereund er shall
file with the Commissioner, within ten (10) days of the date of
employment, a notice of appointment of any agent limited lines
producer, resident or nonresident, appointed by the automobile club
to sell memberships in the motor service club to the public. This
notification shall be upon s uch form as the Commissioner may
prescribe and shall contain the name, address, ag e, sex, and Social
Security number of such club agent producer, and shall also contain
proof satisfactory to the Commissioner that such applicant is not
less than eighteen (1 8) years of age, is of good reputation, and has
received training from the club or is other wise qualified in the
field of motor service club service contracts and knowledgeable of
the laws of this state pertaining thereto. Upon termination of any
agent’s employment by the motor service club, such m otor service
club shall notify the Commissioner , in writing, within five (5) days
of such termination.
B. A registration licensing fee for agents limited lines
producers, resident or nonresident, shall be Twenty Dollars ($20.00)
annually, and such registr ation shall expire on July 1 of each year
unless sooner revoked or suspended as p rovided for in this section
Forty Dollars ($40.00 ) biennially.
C. Upon notice and heari ng, the Commissioner may suspend for
not over twelve (12) months, censure, revoke, or r efuse to renew any
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agent’s license of a producer if he finds as to the licensee that
any one or more of the following causes exis t:
1. Any violation of or noncompliance with any provision of this
act;
2. Obtaining or attempting to obtain any such license through
misrepresentation or fraud;
3. Oral or written misrepresentation of the terms, conditi ons,
benefits, or privileges of a ny motor service club service contract
issued or to be issued by the motor service club he represents or
any other motor servic e club;
4. Misappropriation or conversion to his own use or illegal
holding of monies, belongin g to members or others, received in the
conduct of business under his lic ense;
5. Pleading nolo contendere or guilt y to a felony or conviction
by final judgment of a felony;
6. Demonstration of incompetence sufficient in the opinion of
the Commissioner to make the agent producer a source of injury and
loss to the public;
7. Fraudulent or dishonest practices;
8. Willful solicitation of membership from an indiv idual who is
or has been a member of another motor service club by giving said
person credit for his years of membership with the other mo tor
service club;
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9. Waiving the enrollment fee or otherwise reducing the usual
fees and charges for a new member whe n soliciting membership from an
individual who is or has been a member of another motor service
club.
D. In addition to the penalties pro vided for in this section, a
fine of not less than One Hundred Dollars ($1 00.00) nor more than
One Thousand Dollars ($ 1,000.00) for each occurrence may be levied.
SECTION 20. AMENDATORY 36 O.S. 2011, Section 3108, is
amended to read as follows:
Section 3108. A motor service club or an officer or agent
producer thereof shall not in any manner misr epresent the terms,
benefits or privileges of any service contract issued or to be
issued by it or by another motor service club.
SECTION 21. AMENDATORY 36 O.S. 2011, Section 3639.1, as
amended by Section 11, Chapter 44, O.S.L. 2012 (36 O.S. Supp. 2020,
Section 3639.1), is amended to read as follows:
Section 3639.1. A. No insurer shall cancel, refuse to renew or
increase the premium of a homeown er’s insurance policy or any other
personal residential insurance coverage, which has been in effect
more than forty-five (45) days, solel y because the insured filed a
first claim against the policy. The provisions of this section
shall not be construed t o prevent the cancellation, nonrenewal or
increase in premium of a homeowner’s insurance policy for the
following reasons:
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1. Nonpayment of premium;
2. Discovery of fraud or materia l misrepresentation in the
procurement of the insurance or with respect t o any claims submitted
thereunder;
3. Discovery of willful or reckless acts or omissions on the
part of the named insured which increase any hazard insured aga inst;
4. A change in the risk which substantially increases any
hazard insured against after in surance coverage has been issued or
renewed;
5. Violation of any local fire, health, safety, building, or
construction regulation or ordi nance with respect to any insured
property or the occupancy thereof which substantially increases any
hazard insured against;
6. A determination by the Insurance Commis sioner that the
continuation of the policy would place the insurer in violation of
the insurance laws of this state; or
7. Conviction of the named insured of a crime having as one of
its necessary element s an act increasing any hazard insured against.
B. An insurer shall give to the named insured at the mailing
address shown on a homeowner ’s policy, a written r enewal notice that
shall include new premium, new deductible, new limits or coverage at
least thirty (30) days prior to the expiration date of the policy.
If the insurer fails to provide such notice, the premium,
deductible, limits a nd coverage provided t o the named insurer pri or
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to the change shall remain in effect until notice is given or until
the effective date of replacement coverage obtained b y the named
insured, whichever occurs first. If notice is given by mail, the
notice shall be deemed to have been given on the day t he notice is
mailed. If the insured elects not to renew, any earned prem ium for
the period of extension of the terminated p olicy shall be calculated
pro rata at the lower of the current or previous year ’s rate. If
the insured accepts the renewal, the pre mium increase, if any, and
other changes shall be effective the day follo wing the prior
policy’s expiration or anniversary d ate.
C. An insurer shall make the c ancellation of a homeowner ’s
insurance policy or an y other personal resid ential insurance
coverage effective as of the date of the inception of the new
coverage if the new coverage was obtain ed for the purpose of
replacing the policy.
D. An insurer cancel ing a policy under subsection C of this
section shall not be liable for c laims arising after the date of
cancellation.
SECTION 22. AMENDATORY 36 O.S. 2011, Section 4030, is
amended to read as fol lows:
Section 4030. A. Except as may be otherwise approved by the
Insurance Commissioner, no s ingle premium policy of life insuran ce
or single premium annuity contract shall be deli vered or issued for
delivery in Oklahoma for a consideration other than c ash, cashier’s
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check, check, bank dr aft, money order, or premium note or electronic
payment. This act shall not apply to the transf er of securities to
an insurer pursuant to the insuring of a pension or p rofit sharing
plan qualified under the Federal Inte rnal Revenue Code.
B. This act shall not be held to repeal or alter any law now in
effect, but shall be construed as cumulative wit h and supplemental
to other laws and acts now in effect or enacted hereaf ter.
SECTION 23. AMENDATORY 36 O.S. 2011, Section 4030.1, is
amended to read as follows:
Section 4030.1. A. Within ten (10) days after an insurer
receives written notification of the death of a person covered by a
policy of life insurance, the insurer shall provide to the claiman t
the necessary forms to be complete d to establish proof of the death
of the insured and, if required by the policy, the interest of the
claimant. If the policy contains a provision requiring surr ender of
the policy prior to settlement, the insurer shall include a written
statement to that effect with the forms to be completed. Forms to
establish proof of death and proof of the inter est of the claimant
shall be approved by the Insurance Commission er.
B. An insurer shall pay the proceeds of any benefits u nder a
policy of life insurance not more than thirty (30) days after the
insurer has received proof of death of the insured. If the proceeds
are not paid within this period, the insurer shall pay interest on
the proceeds, at a rate which is not less than the current rate of
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interest on death proceeds on deposit with the insurer, from the
date of death of the insured to the date when t he proceeds are paid.
Should the insurer hold its deposits in a noninterest bearing
account, the rate of interest to be pai d shall be the same rate of
interest as the average United States Treasury Bill rate of the
preceding calendar year, as certified to the Insurance Commissioner
by the State Treasurer on the first r egular business day in January
of each year, plus two (2) p ercentage points, which shall accrue
from the thirty-first day after receipt of proof of loss until the
proceeds are paid. Payment shall be deemed to have been made on the
date an electronic payment is made or the date a check, draft or
other valid instrument which is equivalent to payment was placed in
the U.S. mails in a properly addressed, postpaid envelope; or, if
not so posted, on the date of delivery of such instrument to the
beneficiary.
C. Subsection B of this section shall not ap ply to any life
insurance policy issued before Octobe r 1, 1978, which contains
specific provisions to the contrary.
SECTION 24. AMENDATORY 36 O.S. 2011, Section 4055.7, is
amended to read as follow s:
Section 4055.7. A. 1. The Insurance Commissio ner may conduct
an examination under the Viatical Settlements Act of 2008 of a
licensee as often as the Commissioner in his or her d iscretion deems
appropriate after considering the factors set forth in th is
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paragraph. In scheduling and determining the na ture, scope, and
frequency of the examinations, the Commissioner shall consider such
matters as the consumer complaints, results of financial statement
analyses and ratios, changes in management or ownersh ip, actuarial
opinions, report of independent certi fied public accountants, and
other relevant criteria as determined by the Commissioner.
2. For purposes of completing an examinatio n of a licensee
under the Viatical Settlements Act of 2008, the Commissio ner may
examine or investigate any person, or the b usiness of any person,
insofar as the examination or investigation is, in the sole
discretion of the Commissioner, necessary or mate rial to the
examination of the licensee.
3. In lieu of an examination un der the Viatical Settlements Act
of 2008 of any foreign or alien licensee licensed in this state, the
Commissioner may, at the Commissioner ’s discretion, accept an
examination report on the licensee as prepared by the Commissioner
for the licensee’s state of domicile or port-of-entry state.
4. As far as practical, the examination of a foreign or alien
licensee shall be made in cooperation with the in surance supervisory
officials of other states in which the licensee transacts business.
B. 1. A person req uired to be licensed by the Viatical
Settlements Act of 2008 shall for five (5) years for all settled
policies and for two (2) years for all policie s which are not
settled retain copies of all:
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a. proposed, offered or executed contracts, purchase
agreements, underwriting documents, policy forms, and
applications from the date of the proposal, offer or
execution of the contract or purchase agreement,
whichever is later,
b. all checks, drafts, electronic payment or other
evidence and documentation related to the payment,
transfer, deposit or release of funds from the date of
the transaction, and
c. all other records and documents related to the
requirements of the Viatical Settlements Act of 2008.
2. This subsection does not relieve a person of the obligation
to produce these documents to the Commissioner aft er the retention
period has expired if the person has retained the documents.
3. Records required to be retained by this subsect ion must be
legible and complete and may be retained in paper, photograph,
microprocess, magnetic, mechanical, or electronic me dia, or by any
process that accurately reproduces or forms a durable medium for the
reproduction of a record.
C. 1. Upon determining that an examination should be
conducted, the Commissioner shall issue an examination warrant
appointing one or more exami ners to perform the examination and
instructing them as to the scope of the examination. In cond ucting
the examination, the exam iner shall observe those guidelines and
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procedures set forth in the Examiner s Handbook adopted by the
National Association of I nsurance Commissioners (NAIC). The
Commissioner may also employ such other guidelines or procedu res as
the Commissioner may deem appropriate.
2. Every licensee or person from whom information is sought,
its officers, directors and agents shall provide to the examiners
timely, convenient and free access at all reasonable hours at its
offices to all books, records, accounts, papers, documents, assets
and computer or other recordings relating to the property , assets,
business and affairs of the licensee bein g examined. The officers,
directors, employees and agents of the licensee or person shall
facilitate the examination and aid in the examination so far as it
is in their power to do so. The refusal of a l icensee, by its
officers, directors, employees or a gents, to submit to examination
or to comply with any reasonable written request of the Commissio ner
shall be grounds for suspens ion or refusal of, or nonrenewal of any
license or authority held by the lic ensee to engage in the viatical
settlement business or other business subject to the Commissioner’s
jurisdiction. Any proceedings for suspension, r evocation or refusal
of any license or authority shall be conducted in accordance with
the Administrative Pr ocedures Act.
3. The Commissioner shall have the p ower to issue subpoenas, to
administer oaths and to examine under oath any person as to any
matter pertinent to the examination. Upon the failure or refusal of
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a person to obey a subpoena, the Commissione r may petition a court
of competent jurisdiction, a nd upon proper showing, the Court may
enter an order compelling the witness to appear and testify or
produce documentary evidence . Failure to obey the court order shall
be punishable as contempt of court.
4. When making an examination under the Viatical Settlements
Act of 2008, the Commissioner may retain attorneys, appraisers,
independent actuaries , independent certified public a ccountants or
other professionals and specialists as examiners, the reasonab le
cost of which shall be borne by the licensee tha t is the subject of
the examination.
5. Nothing contained in the Viatical Settlements Act of 200 8
shall be construed to limit th e Commissioner’s authority to
terminate or suspend an examination in order t o pursue other legal
or regulatory action pursuant to the insurance laws of this state.
Findings of fact and conclusions made pursuant to any exami nation
shall be prima facie evid ence in any legal or regulatory action.
6. Nothing contained in the Viatica l Settlements Act of 2008
shall be construed to lim it the Commissioner’s authority to use and,
if appropriate, to make public any final or prelimina ry examination
report, any examiner or licensee workpapers or other documents, or
any other information disc overed or developed during the course of
any examination in the furtherance of any legal or regulatory action
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which the Commissioner may, in his or her sole discretion, deem
appropriate.
D. 1. Examination reports shall be comprised of only facts
appearing upon the books, records or other documents of the
licensee, its agents or other persons examined, or as ascertained
from the testimony of its offi cers or agents or other persons
examined concerning its affairs, and such conclusions and
recommendations as the examiners find reasonably warranted from the
facts.
2. No later than sixty (60) days following completion of the
examination, the examiner in charge shall file with the Commi ssioner
a verified written report of examination under oath. Upon receipt
of the verified report, the Commissioner shall trans mit the report
to the licensee examined, together with a notice that shall afford
the licensee examined a reasonable opportunity of not more than
thirty (30) days to make a written submission or rebuttal w ith
respect to any matters contained in the examina tion report.
3. In the event the Commissioner determines that regulatory
action is appropriate a s a result of an examination, th e
Commissioner may initiate any proceedings or actions provided by
law.
E. 1. Names and individual identification data for al l viators
shall be considered private and confidential information and shall
not be disclosed by the Commissioner, unless require d by law.
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2. Except as otherwise provided in the Viatical Settlements Act
of 2008, all examination reports, working papers, re corded
information, documents and copies thereof produced by, obtained by
or disclosed to the Com missioner or any other person in the course
of an examination made under the Viatical Settlements Act of 200 8,
or in the course of analysis or investigation by the Commissioner of
the financial condition or market conduct of a licensee shall be
confidential by law and privileged, shall n ot be subject to the
Oklahoma Open Records Act, shall not be subject to subp oena, and
shall not be subject to discovery or admi ssible in evidence in any
private civil action. The Commissioner is authorized to use the
documents, materials or other informat ion in the furtherance of any
regulatory or legal action brought as part of the Commissioner’s
official duties.
3. Documents, materials or other information, including, but
not limited to, all working papers, and copies the reof, in the
possession or control of the NAIC and its affiliates and
subsidiaries shall be confidential by law and privileged, shall not
be subject to subpoen a, and shall not be subject to discovery or
admissible in evidence in any private civil action if they are:
a. created, produced or obtained by or disclosed to the
NAIC and its affiliates and subsidiaries in the course
of assisting an examination made unde r this act, or
assisting a Commissioner in the analysis or
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investigation of the financial conditi on or market
conduct of a licensee, or
b. disclosed to the NAIC and its affiliates and
subsidiaries under pa ragraph 4 of this subsection by a
Commissioner.
For the purposes of paragraph 2 of this subsection, “act” means
the law of another state or jurisdic tion that is substantially
similar to the Viatical Settlements Act of 2008.
4. Neither the Commissioner nor any person that received the
documents, material o r other information while acting under the
authority of the Commissioner, including the NAIC and its affiliates
and subsidiaries, shall be permitted to testify in any private civil
action concerning any co nfidential documents, materials or
information subject to paragraph 1 of this subsection.
5. In order to assist in the performance of the Commissio ner’s
duties, the Commissioner:
a. may share documents, materials or other information,
including the confid ential and privileged documents,
materials or information subject to paragraph 1 of
this subsection, with other state, federal and
international regulatory agencies, with the NAIC and
its affiliates and subsidiaries, and with state,
federal and internation al law enforcement authorities,
provided that the recipient agrees to maintain the
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confidentiality and privileged status of the document,
material, communication or other informati on, and
b. may receive documents, materials, communications or
information, including otherwise confidential and
privileged documents, materials or information, from
the NAIC and its affiliates and subsidiaries, and from
regulatory and law enforcement offi cials of other
foreign or domestic jurisdictions, and shall maintain
as confidential or privileged any document, material
or information received with notice or the
understanding that it is confidential or privileged
under the laws of the jurisdiction that is the source
of the document, material or information.
6. No waiver of any applicable privilege or claim of
confidentiality in the documents, materials or information shall
occur as a result of disclosure to the Commissio ner under this
section or as a result of sharing as authorized in paragraph 5 of
this subsection.
7. A privilege established under the law of any state or
jurisdiction that is substantially similar to the privilege
established under this subsection shall be available and enforced in
any proceeding in, and in any court of, this state.
8. Nothing contained in th e Viatical Settlements Act of 2008
shall prevent or be construed as prohibiting the Commissioner from
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disclosing the content of an examination repor t, preliminary
examination report or results, or any matter relating thereto, to
the Commissioner of any oth er state or country, or to law
enforcement official s of this or any other state or agency of the
federal government at any time or to the NAIC, so l ong as such
agency or office rec eiving the report or matters relating thereto
agrees in writing to hold it c onfidential and in a manner consistent
with the Viatical Settlements Act of 2008.
F. 1. An examiner may not be appointed by the Commissioner if
the examiner, either directly or i ndirectly, has a conflict of
interest or is affiliated with the management o f or owns a pecuniary
interest in any person subjec t to examination under the Viatical
Settlements Act of 2008. This section shall not be construed to
automatically preclude an ex aminer from being:
a. a viator,
b. an insured in a viaticated insurance poli cy, or
c. a beneficiary in an insurance policy that is proposed
to be viaticated.
2. Notwithstanding the requirements of this paragraph, the
Commissioner may retain from time to t ime, on an individual basis,
qualified actuaries, certified public accountan ts, or other similar
individuals who are independen tly practicing their professions, even
though these persons may from time to time be similarly em ployed or
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retained by persons su bject to examination under the Viatical
Settlements Act of 2008.
G. 1. No cause of action shall arise nor shall any liability
be imposed against the Commissioner, the Commissioner’s authorized
representatives or any examin er appointed by the Commissioner for
any statements made or conduct performed in good faith while
carrying out the provisions of the Viatical Settlements Act o f 2008.
2. No cause of action shall arise, nor shall any liability be
imposed against any person for the act of communicating or
delivering information or data to the Commissioner or the
Commissioner’s authorized representative or examiner pursuant to an
examination made under the Viatical Settlements Act of 2008, if the
act of communication or deliv ery was performed in good faith and
without fraudulent intent or the intent to deceive. This paragraph
does not abrogate or modify in any way any common law o r statutory
privilege or immunity heretofore enjoyed by any person identified in
paragraph 1 of this subsection.
3. A person identified in paragraph 1 or 2 of this subsection
shall be entitled to an award of attorney fees and costs if he or
she is the prevailing party in a civil cause of action for libel,
slander or any other relevant tort arising ou t of activities in
carrying out the provisions of this act and the party bringing the
action was not substan tially justified in doing so. For purposes of
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this section a proceeding is “substantially justified” if it had a
reasonable basis in law or fact at the time that it was initiated.
H. The Commissioner may investigate suspected fraudulent
viatical settlement acts and persons engaged in the business of
viatical settlements.
SECTION 25. AMENDATORY 36 O.S. 2011, Section 4055.9, is
amended to read as follows:
Section 4055.9. A. 1. A viatical settlement provider entering
into a viatical settlement contract shall first obtain:
a. if the viator is the insured, a written s tatement from
a licensed attending physician that the viator is of
sound mind and under no const raint or undue influence
to enter into a viatical settlement contract, an d
b. a document in which the insured consents to th e
release of his or her medical reco rds to a licensed
viatical settlement provider, viatical settlement
broker and the insurance com pany that issued the life
insurance policy covering the life of the insur ed.
2. Within twenty (20) days after a viator exec utes documents
necessary to transfer any rights under an insurance policy or within
twenty (20) days of entering any agreement, opti on, promise or any
other form of understanding, expressed or implied, to viaticate the
policy, the viatical settlement provi der shall give written notice
to the insurer that issued that insurance policy that the policy has
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or will become a viaticated polic y. The notice shall be accompanied
by the documents required by paragrap h 3 of this subsection.
3. Within twenty (20) days after a viator executes documents
necessary to transfer any rights under an insurance policy or within
twenty (20) days of entering any agreement, option, promise or any
other form of understanding, expre ssed or implied, to viaticate the
policy, the viatical provider shall deliver a copy of the medical
release required under subparagraph b of paragraph 1 of this
subsection, a copy of the viator’s application for the viatical
settlement contract, the notice required under paragraph 2 of this
subsection and a request for verification of covera ge to the insurer
that issued the life policy that is the subject of the viatical
transaction. The National Association of Insurance Commissioner ’s
(NAIC’s) form for verification of coverage shall be used unless
another form is developed and approved by t he Insurance
Commissioner.
4. The insurer shall respond to a request for verification of
coverage submitted on an approved form by a viatical settlement
provider or viatical settlement broker within thirty (30) calendar
days of the date the request is rec eived and shall indicate whether,
based on the medical evidence and documents provided, the insu rer
intends to pursue an investigation at this time regarding the
validity of the insurance contract or possible fraud. The insurer
shall accept a request for verification of coverage made on an NAIC
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form, any form agreed upon by the insurer and the reque stor, or any
other form approved by the Commissioner. The insurer shall accept
an original or facsimile or electronic copy of such request and any
accompanying authorization signed by the viator. Failure by the
insurer to meet its obligations under this subsection shall be a
violation of subsection C of Section 10 and Section 15 of Enrolled
Senate Bill No. 1980 of the 2nd Ses sion of the 51st Oklahoma
Legislature.
5. Prior to or at the time of execution of the viatical
settlement contract, the viatical se ttlement provider shall obtain a
witnessed document in which the viator c onsents to the viatical
settlement contract, repres ents that the viator has a full and
complete understanding of the viatical settlement contract, that he
or she has a full and comple te understanding of the benefits of the
life insurance policy, acknowledg es that he or she is entering into
the viatical settlement contract freely and voluntar ily and, for
persons with a terminal or chronic illness or condition,
acknowledges that the insu red has a terminal or chronic illness and
that the terminal or chronic il lness or condition was diagnosed
after the life insurance policy was issued.
6. The insurer shall not unreasonably delay effecting change of
ownership or beneficiary with any life se ttlement contract entered
into in this state or with a resident of this s tate.
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7. If a viatical settlement broker performs any of these
activities required of the viatical settlement provider, the
provider is deemed to have fulfilled the requirements of t his
section.
B. All medical information solicited or obtained by any
licensee shall be subject to the applicable provisions of state law
relating to confidenti ality of medical information.
C. All viatical settlement contracts entered into in this state
shall provide the viator with an absolute right to rescind the
contract before the earlier of thirty (30) calendar days after the
date upon which the viatical se ttlement contract is executed by all
parties or fifteen (15) calendar days after the viatical se ttlement
proceeds have been sent to the viator. Rescission by the viator may
be conditioned upon the viator both giving not ice and repaying to
the viatical settlement provider within the rescission period all
proceeds of the settlement and any premiums, l oans and loan interest
paid by or on behalf of the viatical settlement pr ovider in
connection with or as a consequence of th e viatical settlement. If
the insured dies during the rescission period, the viatical
settlement contract shall be deemed to have b een rescinded, subject
to repayment to the viatical settlement provider o r purchaser of all
viatical settlement proceeds, an d any premiums, loans and loan
interest that have been paid by the viatical settlement provider or
purchaser, which shall be paid wi thin sixty (60) calendar days of
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the death of the insured. In the event of any rescission, if the
viatical settlement provi der has paid commissions or other
compensation to a viatical settlement broker in connection with the
rescinded transaction, the via tical settlement broker shall refund
all such commissions and compensatio n to the viatical settlement
provider within five ( 5) business days following receipt o f written
demand from the viatical settlement provider, which demand shall be
accompanied by either the viator’s notice of rescission if rescinded
at the election of the viator, or notice of the death of the insured
if rescinded by reason of the death of t he insured within the
applicable rescission period.
D. The viatical settlement provider shall i nstruct the viator
to send the executed documents required to effect the change in
ownership, assignment or change in benefi ciary directly to the
independent escrow agent. Within three (3) business days after the
date the escrow agent receives the documen t or from the date the
viatical settlement provider receives the document s, if the viator
erroneously provides the documents directly to the provider, the
provider shall pay or transfer the proceeds of the viatical
settlement into an escrow or trust accoun t maintained in a state- or
federally-chartered financial institution who se deposits are insured
by the Federal Deposit Insu rance Corporation (FDIC). Upon paym ent
of the settlement proceeds into the escrow account, the escrow agent
shall deliver the origi nal change in ownership, assignment or change
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in beneficiary forms to the viatical settlement provider or related
provider trust or other designated representat ive of the viatical
settlement provider. Upon the escrow agent ’s receipt of the
acknowledgment of the properly completed transfer of ownership,
assignment or designatio n of beneficiary from the insurance company,
the escrow agent shall pay the settlement proceeds to the viator.
E. Failure to tender consideration to the viator for the
viatical settlement contract within the time set forth in the
disclosure pursuant to pa ragraph 7 of subsection A of Section 8 of
Enrolled Senate Bill No. 1980 of the 2nd Sess ion of the 51st
Oklahoma Legislature renders the viatical settlement contract
voidable by the viator for lack of consideration until the time
consideration is tendered t o and accepted by the viator. Funds
shall be deemed sent by a viatical settlement prov ider to a viator
as of the date that the escrow agent either releases funds for wire
transfer to the viator or, places a check for delivery to the viator
via United States Postal Service or other nationally recognized
delivery service or make an electronic payment to the viator .
F. In order to assure that a viator, at the time of the
viatical settlement has a life expectancy of less than two (2)
years, receives reasonabl e return for viaticating an insurance
policy, the following shall be minimum discounts:
Minimum Percentage of Face
Insured’s Life Value Less Outstanding Loans
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Expectancy Received By Viator
Less than six (6) months 80%
At least six (6) but less than
twelve (12) months 70%
At least twelve (12) but less
than eighteen (18) months 65%
At least eighteen (18) months but
less than twenty-four (24) months 60%
G. Contacts with the insured f or the purpose of determining the
health status of the insured by the via tical settlement provider or
viatical settlement br oker after the viatical settlement h as
occurred shall only be made by a viatical settlement provider or
broker licensed in this stat e or its authorized representatives and
shall be limited to once every th ree (3) months for insureds with a
life expectancy of more than one (1) year, and to no more than once
per month for insureds with a life expectancy of one (1) year or
less. The provider or broker shall explain the procedure for these
contacts at the time the viatical settlement contract is entered
into. The limitations set forth in this s ubsection shall not apply
to any contacts with an insured for reasons other than determining
the insured’s health status. Viatical settlement providers and
viatical settlement brokers shall be responsible for the action s of
their authorized representative s.
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SECTION 26. AMENDATORY 36 O.S. 2011, Section 4103, is
amended to read as follows:
Section 4103. A. No policy of group life insurance shall be
delivered in this state unless a schedule of th e premium rates
pertaining to the for m thereof is filed with the Insurance
Commissioner and unless it contains in substance the following
provisions, or provisions which are more favorable to the persons
insured, or at least as favorable to the persons ins ured and more
favorable to the policy holder,; provided, however, (a) that
provisions six (6) to ten (10) inclusive :
1. Paragraphs 6 through 10 of this section shall not apply to
policies issued to a credit or to insure debtors of such creditor;
(b) That
2. That the standard provisions requir ed for individual life
insurance policies shall not apply to group life insurance policies;
and
(c) That
3. That if the group life insurance policy is on a plan of
insurance other than the term plan, it shall contain a nonforfeiture
provision or provisions which is or are equitable to the insured
persons and to the policyholder, but nothing herein shall be
construed to require that group life insurance policies contain t he
same nonforfeiture provisions as are required fo r individual life
insurance policies:
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1. B. A provision that the policyho lder is entitled to a grace
period of thirty-one (31) days for th e payment of any premium due
except the first, during which grace period the death benefit
coverage shall continue in force, unless the policy holder shall have
given the insurer written notic e of discontinuance in advance of the
date of discontinuance and in accordance with the terms of the
policy. The policy may provid e that the policyholder shall be
liable to the insurer for the payment of a pro rata premium for the
time the policy was in f orce during such grace period .
2. C. A provision that the validity of the policy shall not be
contested, except for nonpayment of premiums, after it has been in
force for two (2) ye ars from its date of issue ;, and that no
statement made by any person insure d under the policy relating to
his or her insurability shall be u sed in contesting the validity of
the insurance with respect to which such statement was made after
such insurance has been in force prior to the contest for a period
of two (2) years during such person’s lifetime nor unless it is
contained in a written in strument signed by him or her.
3. D. A provision that a copy of the application, if any, of
the policyholder shall be attached to the policy wh en issued, that
all statements made by the policy holder or by the persons insured
shall be deemed representations and not warranties, and that no
statement made by any person i nsured shall be used in any contest
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unless a copy of the instrument containing t he statement is or has
been furnished to such per son or to his or her beneficiary.
4. E. A provision setting forth the conditions, if any, under
which the insurer reserves the right to require a person eligible
for insurance to furnish evidence of individua l insurability
satisfactory to the insurer as a c ondition to part or all of his or
her coverage.
5. F. A provision specifying an equitable adjustment of
premiums or of benef its or of both to be made in the event the age
of a person insured has been misstate d, such provision to contain a
clear statement of the method of adjustment to be used .
6. G. A provision that any s um becoming due by reason of the
death of the person ins ured shall be payable to the beneficiary
designated by the person insured, subject to the provisions of the
policy in the event there i s no designated beneficiary as to all or
any part of such sum, li ving at the death of the person insured, and
subject to any right reserved by the insurer in the policy and set
forth in the certificate to pa y at its option a part of such sum not
exceeding Five Hundred Dollars ($500.00) to any person appearing to
the insurer to be equitably entitled thereto by reason of havin g
incurred funeral or other expenses incident to th e last illness or
death of the person insured.
7. H. A provision that the insurer wil l issue to the
policyholder for delivery to each person insured a n individual
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certificate setting forth a statement as to the insurance protection
to which he is entitled , to whom the insurance benefits are payable,
and the rights and conditions set forth in paragraphs (8), (9) and
(10) of this section:.
8. I. A provision that if the insurance, or any portion of it,
on a person covered under the policy ceases because of t ermination
of employment or of membe rship in the class or classes eligible for
coverage under the policy, such person shall be entitled to have
issued to him or her by the insurer, without evidence of
insurability, an individual policy of life insurance wi thout
disability or other supplement ary benefits, provided an application
for the individual policy shall be made, and the first premium paid
to the insurer, within thirty-one (31) days after such terminat ion,
and provided further that: (a)
a. the individual policy shall, at the option of su ch
person, be on any one of the forms, except term
insurance, then customarily issued by the insurer at
the age and for the amount applied for; (b),
b. the individual policy shall be in an amount not in
excess of the amount of life insurance which ceases
because of such termination, less, in the case of a
person whose membership in the class or classes
eligible for coverage terminates but who continues in
employment in another class, the amount of any life
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nsurance for which such person is or becomes eligi ble
within thirty-one (31) days after such termination
under any other group policy; provided that any amount
of insurance which shall have matured on or before the
date of such termination as an endowment payable to
the person insured, whether in one sum or in
installments or in the form of an annuity, shall not,
for the purposes of this provision subparagraph, be
included in the amount which is considered to cease
because of such termination;, and (c)
c. the premium on the individual policy shall be at th e
insurer’s then customary rate applicable to the form
and amount of the individual policy, to the class of
risk to which such person then belongs, and to his or
her age attained on the effective date of the
individual policy.
9. J. A provision that if the group policy terminates or is
amended so as to terminate the insurance of any class of insured
persons, every person i nsured thereunder at the date of such
termination whose insurance terminates and who has been so insu red
for at least five (5) years prio r to such termination date shall be
entitled to have issued to him or her by the insurer an individual
policy of life insurance, subject to the same conditions and
limitations as are provided by paragraph (8) 8 of this section,
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except that the group policy may provide that the amount of such
individual policy shall not exceed the smaller of : (a)
a. the amount of the person ’s life insurance protection
ceasing because of th e termination or amendment of the
group policy, less the amount of any life insurance
for which he or she is or becomes eligible under any
group policy issued or reinstated by the same or
another insurer with in thirty-one (31) days after such
termination, and (b)
b. Ten Thousand Dollars ($10,000.00) .
10. K. A provision that if a person insu red under the group
policy dies during the period within which he or she would have been
entitled to have an individual p olicy issued to him or her in
accordance with paragraph (8) I or (9) J of this section and before
such an individual policy shall have become effective, the amount of
life insurance which he or she would have been entitled to have
issued to him or her under such individual policy shall be payable
as a claim under the group policy, whether or not applica tion for
the individual policy or th e payment of the first premium therefor
has been made.
11. L. In the case of a policy issued to a creditor to insure
debtors of such creditor, a provision that the insu rer will furnish
to the policyholder for delivery t o each debtor insured under the
policy a form which shall contain a statement that the life of the
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debtor is insured under the policy and that any death benefi t paid
thereunder by reason of his or her death shall be applied to reduce
or extinguish the inde btedness.
SECTION 27. AMENDATORY 36 O.S. 2011, Section 4112, is
amended to read as follows:
Section 4112. An insurer shall pay the proceeds of any benefits
under group life insura nce policy not more than thirty (30) days
after the insurer has received proof of death of the insured. If
the proceeds are not paid within th is period, the insurer shal l pay
interest on the proceed s, at a rate which is not less than the
current rate of interest on death proceeds on deposit with the
insurer, from the date of death of the in sured to the date when the
proceeds are paid. Payment s hall be deemed to have been made on the
date an electronic payment is made or a check, draft or other valid
instrument which is equivalent to payment was placed in the U.S.
mails in a properly address ed, postpaid envelope; or, if not so
posted, on the date of delivery of such inst rument to the
beneficiary.
SECTION 28. AMENDATORY 36 O.S. 2011, Section 6060.12, as
amended by Section 3, Chapter 75, O.S.L. 2020 (36 O.S. Supp. 2020,
Section 6060.12), is amended to read as follows:
Section 6060.12. A. 1. A health benefit plan that, at the end
of its base period, experiences a greater than two pe rcent (2%)
increase in premium costs pursuant to providing benefits for
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treatment of mental health and substance use disorders shall be
exempt from the provisions of Section 6060.11 of this title.
2. To calculate base-period-premium costs, the heal th benefit
plan shall subtract from premium costs incurred during the base
period, both the premium costs incurred during the period
immediately preceding the base period and any premium cost incre ases
attributable to factors unrelated to benefits for trea tment of
mental health and substance use disorders .
3. a. To claim the exemption provided for in subsection A
paragraph 1 of this section a health benefit plan
shall provide to the Insurance Commissioner a written
request signed by an actuary stating the reasons a nd
actuarial assumptions upon whi ch the request is based.
b. The Commissioner shall verify the information provided
and shall approve or disapprove the request within
thirty (30) days of receipt.
c. If, upon investigation, the Commissioner finds that
any statement of fact in the request i s found to be
knowingly false, the health benefit plan may be
subject to suspension or loss of license or any other
penalty as determined by the Commissioner , or the
State Commissioner of Health with regard to health
maintenance organizations.
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SECTION 29. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6124.2 of Title 36, unless there
is created a duplication in numbering, r eads as follows:
A. No prepaid funeral benefit permit holder shall change the
name under which the permit holder operates except as provided in
this section. The prepaid funeral benefit permit holder shall
obtain approval from the Insurance Commissioner at least thirty (30)
days prior to changing the name of the permit holder. The
application for change of name of a prepaid funeral benefit permit
holder shall be in a form provided by the Insurance Commissioner and
shall contain, at a minimum, the followi ng information:
1. The name of the permit hold er;
2. The proposed new name of the permit holder; and
3. The date the name change will become effective.
B. The Insurance Commissioner may waive the approval
requirement provided for in subsection A of thi s section upon good
cause shown.
C. The Insurance Commissioner may deny the cha nge of name of
the prepaid funeral benefit permit holder upon good cause shown.
D. Upon approval of a change of name, the Insurance
Commissioner shall issue a prepaid funeral benefit permit with the
new name. The prepaid funeral benefit permit holder sha ll display
in a conspicuous place at all times on the premises of the
organization all permits issued pursuant to the provisions of this
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section. No organization may consent t o or allow the use or display
of the permit by a person other than the persons a uthorized to
represent the organization in contracting prepaid funeral benefits.
E. The Insurance Commissioner may prescribe rules concerning
matters incidental to this sectio n.
SECTION 30. AMENDATORY 36 O.S. 2011, Section 6216.1, is
amended to read as follows:
Section 6216.1. No insurance company authorized to transact
insurance in this state shall make payment of any insurance claim,
or any portion of a claim, to a public adjuster on account of
services rendered by a public adjuster to an insured unless the name
of the insured is added as a joint payee on any claim check or,
draft or electronic payment . The payment, whether by check, draft ,
electronic payment or otherwise, shall be s ent to the address or
electronic mail address designated by the insured.
SECTION 31. AMENDATORY 36 O.S. 2011, Section 6217, as
last amended by Section 14, Chapter 269, O.S.L. 2013 (36 O.S. Supp.
2020, Section 6217), is amended to read as follows:
Section 6217. A. All licenses issued pursuant to the
provisions of the Insurance Adjusters Licensing Act shall c ontinue
in force not longer t han twenty-four (24) months. T he renewal dates
for the licenses may be staggered throughout the year by notif ying
licensees in writing of the expiration and ren ewal date being
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assigned to the licensees by the Insurance Commiss ioner and by
making appropriate adjustments in the biennial licensing fee.
B. Any licensee applying for renewal of a license as an
adjuster shall have completed not less than twenty -four (24) clock
hours of continuing insurance education, of which three ( 3) hours
shall be in ethics, within the previous twenty -four (24) months
prior to renewal of the license. The Insurance Commissioner shall
approve courses and providers of continuing educat ion for insurance
adjusters as required by this section.
The Insurance Department may use one o r more of the following to
review and provide a nonbinding reco mmendation to the Insurance
Commissioner on approval or disapproval of courses and providers of
continuing education:
1. Employees of the Insurance Commissioner;
2. A continuing education adv isory committee. The continuing
education advisory committee i s separate and distinct from the
Advisory Board established by Section 6221 of this title ;
3. An independent service whose normal business activities
include the review and approval of continu ing education courses and
providers. The Commissioner may nego tiate agreements with such
independent service to review documents and other materials
submitted for approval of courses and providers and present the
Commissioner with its nonbinding recommend ation. The Commissioner
may require such independent service t o collect the fee charged by
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the independent service for reviewing materials provided for review
directly from the course pr oviders.
C. An adjuster who, during the time period prior to renewal ,
participates in an approved p rofessional designation program shall
be deemed to have met the biennial requir ement for continuing
education. Each course in the curriculum for the progra m shall
total a minimum of twenty -four (24) hours. Each approved
professional designation program i ncluded in this section shall be
reviewed for quality and compliance every thre e (3) years in
accordance with standardized criteri a promulgated by rule.
Continuation of approved status is conting ent upon the findings of
the review. The list of profession al designation programs approved
under this subsection shall be made available to producers and
providers annually.
D. The Insurance Department may promulg ate rules providing that
courses or programs offered by professional associations shall
qualify for presumptive continuing education credit approval. The
rules shall include stan dardized criteria for reviewing the
professional associations’ mission, membership, and other relevant
information, and shall provide a procedure for the Department to
disallow a presumptively approved course. Professional association
courses approved in accordance with this subsection shall be
reviewed every three (3) years to de termine whether they continue to
qualify for continuing education cre dit.
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E. The active service of a licensed adjuster as a member of a
continuing education advisory committee, a s described in paragraph 2
of subsection B of this section, shall be deemed t o qualify for
continuing education credi t on an hour-for-hour basis.
F. 1. Each provider of contin uing education shall, after
approval by the Commissioner, submit an annual fee. A fee may be
assessed for each course submission at the time it is first
submitted for review and upon submission f or renewal at expiration.
Annual fees and course submission fees shall be set forth as a ru le
by the Commissioner. The fees are payable t o the Insurance
Commissioner and shall be deposited in the State Insurance
Commissioner Revolving Fund, created in Se ction 307.3 of this title,
for the purposes of fulfilling an d accomplishing the conditions a nd
purposes of the Oklahoma Producer Licensing Act and the Insurance
Adjusters Licensing Act. Pub lic-funded educational ins titutions,
federal agencies, nonprofit o rganizations, not-for-profit
organizations and Oklahoma stat e agencies shall be exempt from this
subsection.
2. The Commissioner may asses s a civil penalty, after notice
and opportunity for hearing, against a contin uing education provider
who fails to comply with the requirements of the Insurance Adjusters
Licensing Act, of not less than One Hun dred Dollars ($100.00) nor
more than Five Hundr ed Dollars ($500.00), for each occurrence. The
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civil penalty may be enforced in the same manner in which civil
judgments may be enforced.
G. Subject to the right of the Commis sioner to suspend, revoke,
or refuse to renew a license of an adjuster, any suc h license may be
renewed by filing on the form pres cribed by the Commissioner on or
before the expiration date a writ ten request by or on behalf o f the
licensee for such renewal and proof of completion of the continuing
education requirement set forth in s ubsection B of this section,
accompanied by payment of the renewal fee.
H. If the request, proof of compliance with the continuing
education requirement and fee for renewal of a license as an
adjuster are filed with the Commissioner prior to the expiratio n of
the existing license, the licensee may continu e to act pursuant to
said license, unless revoked or suspended pri or to the expiration
date, until the issuance of a renewal l icense or until the
expiration of ten (10) days after the Commissioner has refu sed to
renew the license and has mailed notice of s aid refusal to the
licensee. Any request for renewal filed after the date of
expiration may be considered by the Commissioner as an application
for a new license.
SECTION 32. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 6470.35 of Title 36, unless
there is created a duplication in numberin g, reads as follows:
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A. As used in this section, “dormant captive insurance company”
means a captive insurance company that has:
1. Ceased transacting the busine ss of insurance, including the
issuance of insurance policies; a nd
2. No remaining liabiliti es associated with insurance business
transactions or insurance p olicies issued prior to the filing of its
application for a certificate of dormancy under this sec tion.
B. A dormant captive insurance company domiciled in this state
that meets the criteria of subsection A of this section may apply to
the Insurance Commissioner for a certificate of dormancy. The
certificate of dormancy shall be subject to renewal ev ery five (5)
years and shall be forfeited if not renewed within such time.
C. A dormant captive insurance company that has been issued a
certificate of dorma ncy shall:
1. Possess and thereafter maintain unimpaired, paid-in capital
and surplus of not less than Twenty-five Thousand Dollars
($25,000.00);
2. Submit on or before March 1 of each year to the Insurance
Commissioner a report of its financial conditio n, verified by an
oath of two of its executive officers, in a form prescribed by the
Insurance Commissioner; and
3. Pay a nonrefundable renewal fee of Five Hundr ed Dollars
($500.00).
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D. A dormant captive insurance company shall not be subject to
or liable for the payment of any tax under Section 6753 of Title 36
of the Oklahoma Statutes.
E. A dormant captive insurance company shall apply to the
Insurance Commissioner for approval to surrend er its certificate of
dormancy and resume conducting the business of insurance prior to
issuing any insurance po licies.
F. A certificate of dormancy shall be revo ked if a dormant
captive insurance company no longer meets the c riteria of subsection
A of this section.
G. A dormant captive insurance company may be subjec t to
examination under Section 6470.13 of Title 36 of the Oklahoma
Statutes for any year when it d id not qualify as a dormant captive
insurance company. The Insu rance Commissioner may examin e a dormant
captive insurance company pursuant to Section 6470.13 of Title 36 of
the Oklahoma Statutes.
H. The Insurance Commissioner may promulgate and adopt rul es
and regulations implementing the provisions of this section.
SECTION 33. AMENDATORY 36 O.S. 2011, Section 6552, is
amended to read as follows:
Section 6552. As used in the Hospital and Medical Services
Utilization Review Act:
1. “Utilization review” means a system for prospectively,
concurrently and retrospectively re viewing the appropriate and
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efficient allocation of hospital reso urces and medical services
given or proposed to be given to a patient or group of patients. It
does not include an insurer ’s normal claim review process to
determine compliance with the spec ific terms and conditions of the
insurance policy;
2. “Private review agent” means a person or entity who performs
utilization review on behalf of:
a. an employer in this state, or
b. a third party that provides or administers hospital
and medical benefits to citizens of this state,
including, but not limited to:
(1) a health maintenance organization issued a
license pursuant to Section 2501 et seq. of Title
63 of the Oklahoma Statutes, unl ess the health
maintenance organizatio n is federally regulated
and licensed and has on file with the Insurance
Commissioner of Health a plan of utilization
review carried out by health care professionals
and providing for complain t and appellate
procedures for claims, or
(2) a health insurer, not-for-profit hospital servi ce
or medical plan, health insurance service
organization, or pre ferred provider organization
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or other entity offering health insurance
policies, contracts or bene fits in this state;
3. “Utilization review plan ” means a description of utilization
review procedures;
4. “Commissioner” means the Insurance Commissioner;
5. “Certificate” means a certificate of registration granted by
the Insurance Commissioner to a pr ivate review agent; and
6. “Health care provider ” means any person, firm, corporation
or other legal entity that is licensed, certified, or otherwise
authorized by the laws of this state to provide health care
services, procedures or supplies in the ordin ary course of business
or practice of a profession.
SECTION 34. AMENDATORY 36 O.S. 2011, Section 6753, as
amended by Section 38, Chap ter 150, O.S.L. 2012 (36 O.S. Supp. 2020,
Section 6753), is amended to read as follows:
Section 6753. A. Home service cont racts shall not be issued,
sold or offered for sale in this state u nless the provider has:
1. Provided a receipt for, or other writ ten evidence of, the
purchase of the home service contract to the contract holder; and
2. Provided a copy of the home servi ce contract to the service
contract holder within a reasonable peri od of time from the date of
purchase.
B. Each provider of home s ervice contracts sold in this state
shall file a registration with, and on a form prescribed by, t he
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Insurance Commissioner consisting of their name, full corpora te
physical street address, t elephone number, contact person and a
designated person in this s tate for service of process. Each
provider shall pay to the Commissioner a fee in the amount of O ne
Thousand Two Hundred Do llars ($1,200.00) upon initial registr ation
and every three (3) yea rs thereafter. Each provider shall pay to
the Commissioner an An tifraud Assessment Fee of Two Thousand Two
Hundred Fifty Dollars ($2,250.00) upon initial registra tion and
every three (3) years thereafter. The registration nee d only be
updated by written notification to the Commissioner if material
changes occur in the registration on file. A proper registration is
de facto a license to conduct business in Oklahom a and may be
suspended as provided in Section 6755 of this title . Fees received
from home service contract providers shall not be subject to any
premium tax, but shall be subject to an administrative fee equal to
two percent (2%) of the gross fees receive d on the sale of all home
service contracts issued in this state during the preceding calenda r
quarter. The fees shall be paid quarterly to the Commissioner and
submitted along with a report on a form prescribed by the
Commissioner. However, service cont ract providers may elect t o pay
an annual administrative fee of Three Thousand Dollars ($3,00 0.00)
in lieu of the two-percent administrative fee, if the provi der
maintains an insurance policy as provided in paragraph 3 of
subsection C of this section.
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C. In order to assure the fai thful performance of a provider ’s
obligations to its contract holde rs, each provider shall be
responsible for complying with the req uirements of paragraph 1, 2 or
3 of this subsection:
1. a. maintain a funded reserve account for i ts obligations
under its contracts issued and outstanding in thi s
state. The reserves shall not be less than forty
percent (40%) of gross consideration recei ved, less
claims paid, on the sale of the service contract for
all in-force contracts. The reserv e account shall be
subject to examination and review by the Comm issioner,
and
b. place in trust with the Commissioner a financial
security deposit, having a v alue of not less than five
percent (5%) of the gross consideration received, less
claims paid, on the sale of the service co ntract for
all service contracts issue d and in force, but not
less than Twenty-five Thousand Dollars ($25,000.00),
consisting of one of the following:
(1) a surety bond issued by an authorized surety,
(2) securities of the type el igible for deposit by
authorized insurers in this state,
(3) cash,
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(4) a letter of credit issued by a qualified
financial institution, or
(5)
(4) another form of security prescribed by rule
promulgated by the Commissioner;
2. a. maintain, or together with its parent company
maintain, a net worth or stockholders ’ equity of
Twenty-five Million Dollars ($25,000,000.00),
excluding goodwill, intangible assets, cust omer lists
and affiliated receivables, and
b. upon request, provide the Commissioner with a copy o f
the provider’s or the provider’s parent company’s most
recent Form 10-K or Form 20-F filed with the
Securities and Exchange Commission (SEC) within the
last calendar year, or if the company does not file
with the SEC, a copy of the company ’s financial
statements, which shows a ne t worth of the provider or
its parent company of at least Twen ty-five Million
Dollars ($25,000,000.00) based upon Generally Accepted
Accounting Principles (GAAP) accounting standa rds. If
the provider’s parent company’s Form 10-K, Form 20-F,
or financial statements are filed to meet the
provider’s financial stability requirement, then the
parent company shall agree to guarantee the
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obligations of the provider relating to service
contracts sold by the provider in this state; or
3. Purchase an insurance poli cy which demonstrates to the
satisfaction of the Insurance Com missioner that one hundred percent
(100%) of its claim exposure is cov ered by such policy. The
insurance shall be ob tained from an insurer that is licensed,
registered, or otherwise authorized to do business in this state,
that is rated B++ or better by A .M. Best Company, Inc., and that
meets the requirements of subsection D of this section. For the
purposes of this paragraph, the insurance policy shall contain the
following provisions:
a. in the event that the provider is unable to fulfill
its obligation under contracts issued in this state
for any reason, including insolv ency, bankruptcy, or
dissolution, the insurer s hall pay losses and unearned
premiums under such pl ans directly to the person
making the claim under the contract,
b. the insurer issuing t he insurance policy shall assume
full responsibility for the administr ation of claims
in the event of the inability o f the provider to do
so, and
c. the policy shall not be canceled or not renew ed by
either the insurer or the provide r unless sixty (60)
days’ written notice thereof has been given to the
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Commissioner by the in surer before the date of such
cancellation or nonrenewal.
D. The insurer providing the insurance policy used to satisfy
the financial responsibility requirements of paragraph 3 of
subsection C of this section shall meet one of the following
standards:
1. The insurer shall, at the time the policy is f iled with the
Commissioner, and continuously therea fter:
a. maintain surplus as to policyholders and paid -in
capital of at least Fifteen Mi llion Dollars
($15,000,000.00), and
b. annually file copies of the aud ited financial
statements of the insurer, its N ational Association of
Insurance Commissioners (NAI C) Annual Statement, and
the actuarial certification required by and filed in
the state of domicile of the insurer; or
2. The insurer shall, at the time the policy is filed with the
Commissioner, and cont inuously thereafter:
a. maintain surplus as to poli cyholders and paid-in
capital of less than Fifteen Million Dollar s
($15,000,000.00),
b. demonstrate to the satisfaction of the Commissioner
that the company maintains a ratio of net written
premiums, wherever written, to surplus as to
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policyholders and pai d-in capital of not greate r than
three to one, and
c. annually file copies of the audited fina ncial
statements of the insurer, its NAIC Annual Statement,
and the actuarial certification required by and fil ed
in the state of domicile of the insurer.
E. Except for the registration r equirements in subsection B of
this section, providers, administrato rs and other persons marketing,
selling or offering to sell home service contracts are exempt from
any licensing requirements of this state and shall not be subje ct to
other registration i nformation or security requirements. H ome
service contract provider s as defined in Section 6752 of this title
and properly register ed under this law are exempt from any treatment
pursuant to the Service Warranty Act. Home servic e contract
providers applying for registration under the Oklahoma Home Service
Contract Act that have not been registered in the preceding twelve
(12) months under the Oklahoma Home Service Contract Act ma y be
subject to a thirty-day prior review before th eir registration is
deemed complete. Said applications shall be deemed complete after
thirty (30) days unless the Commissioner takes action in that period
under Section 6755 of this title, for cause shown , to suspend their
registration.
F. The marketing, sale, offering for sale, issuance, making,
proposing to make and administration of home servi ce contracts by
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providers and related service contract sellers, administrators, and
other persons, including bu t not limited to real estate licensees,
shall be exempt from all other provis ions of the Insurance Code.
SECTION 35. AMENDATORY 36 O.S. 2011, Section 6904, is
amended to read as follow s:
Section 6904. A. 1. Upon receipt of an ap plication for
issuance of a certificate of authorit y, the Insurance Commissio ner
shall forthwith transmit copies of such application and accompan ying
documents to the State Commissioner of Health.
2. The State Commissioner of Health shall within forty-five
(45) days determine whether the applicant for a certificate of
authority, with respect to health care services to be furnished, has
complied with the provisions of Section 7 6907 of this act title.
3. Within forty-five (45) days of receipt of an applica tion for
issuance of a certificate of authority fro m the Insurance
Commissioner, the State Commissioner of Health sh all certify to the
Insurance Commissioner that the proposed health maintenance
organization meets the requirements of Section 7 of this act, or
shall notify the Insurance Commissioner that th e proposed health
maintenance organization does not meet such req uirements and shall
specify in what respects the applicant is deficient.
B. The Insurance Co mmissioner shall, within forty-five (45)
days of receipt of a certification of determining compliance or
notice of deficiency from the State Commissioner of Health , issue a
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certificate of authority to a person filing a completed application
upon receipt of the prescribed fees and upon the Insurance
Commissioner’s being satisfied that:
1. The persons responsible for the conduct of the affairs of
the applicant are co mpetent and trustworthy, and possess good
reputations;
2. Any deficiency identified by the State Commissioner of
Health has been corrected and the State Commissioner of Health has
certified to the Insurance Commissio ner has determined that the
health maintenance organization ’s proposed plan of operation meets
the requirements of Section 7 6907 of this act title;
3. The health maintenance org anization will effectively provide
or arrange for the provision of basic heal th care services on a
prepaid basis, through insurance or otherwise, except to the extent
of reasonable requirements for copayments or deductibles, or both;
and
4. The health maintenance organization is in compliance with
the provisions of Sections 13 6913 and 15 6915 of this act title.
C. A certificate of authority shal l be denied only after the
Insurance Commissioner complies with the requirements of Section 20
6920 of this act title. No other criteria may be used to deny a
certificate of authority.
SECTION 36. AMENDATORY 36 O.S. 2011, Section 6907, is
amended to read as follows:
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Section 6907. A. Every he alth maintenance organization shall
establish procedures that ensure that health care services pro vided
to enrollees shall b e rendered under reasonable standards o f quality
of care consistent with prevailing professionally recognized
standards of medical p ractice. The procedures shall include
mechanisms to assure availability, accessibility and contin uity of
care.
B. The health maintenance organization shall have an ongoing
internal quality assurance program to monitor and evaluate its
health care services, including primary and specialist physician
services and ancillary and preventive health care se rvices across
all institutional and noninstitutional settings. T he program shall
include, but need not be limited to, the following:
1. A written statement of goals and objectives that emphasizes
improved health status in evaluating the quality of care r endered to
enrollees;
2. A written quality assurance plan that d escribes the
following:
a. the health maintenance organization ’s scope and
purpose in quality assurance,
b. the organizational structure res ponsible for quality
assurance activities,
c. contractual arrangements, where appropriate, for
delegation of quality assurance activities,
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d. confidentiality policies and procedures,
e. a system of ongoing eva luation activities,
f. a system of focused eval uation activities,
g. a system for credentialing an d recredentialing
providers, and performing peer review activitie s, and
h. duties and responsibilities of the designated
physician responsible for the quality assurance
activities;
3. A written statement describing the system of ongoing quality
assurance activities including:
a. problem assessment, identification, sele ction and
study,
b. corrective action, monitoring, evaluation and
reassessment, and
c. interpretation and analysis of patterns of care
rendered to individual patients by individual
providers;
4. A written statement d escribing the system of focused quality
assurance activities based o n representative samples of the enrolled
population that identif ies method of topic selection, study, data
collection, analysis, interpretation and report format; and
5. Written plans for taking appropriate corrective action
whenever, as determined by the quality assurance program,
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inappropriate or substandard service s have been provided or services
that should have been furnished have not been provided.
C. The organization shall record p roceedings of formal quality
assurance program activities and mainta in documentation in a
confidential manner. Quality assurance pr ogram minutes shall be
available to the State Insurance Commissioner of Health.
D. The organization shall ensure the use an d maintenance of an
adequate patient record system which will facili tate documentation
and retrieval of clinical information for the purpose of the health
maintenance organization ’s evaluating continuity and coordination of
patient care and assessing the q uality of health and medical care
provided to enrollees.
E. Enrollee clinical records shall be available to the State
Insurance Commissioner of Health or an authorized designee f or
examination and review to ascertain compliance w ith this section, or
as deemed necessary by the State Insurance Commissioner of Health.
F. The organization shall establish a mechanism for periodic
reporting of quality assurance program activities to th e governing
body, providers and appropriate organiz ation staff.
G. The organization shall be required to establish a mechanism
under which physicians participating in the plan may provide input
into the plan’s medical policy including, but not limited to,
coverage of new technology and procedures, utiliza tion review
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criteria and procedures, quality, credentialing and r ecredentialing
criteria, and medical management procedures.
H. As used in this section “credentialing” or
“recredentialing”, as applied to physicians and other health care
providers, means the process of accessing an d validating the
qualifications of such persons to provide health ca re services to
the beneficiaries of a health maintenance organiz ation.
“Credentialing” or “recredentialing” may include, but need not be
limited to, an evaluatio n of licensure status, edu cation, training,
experience, competenc e and professional judgment. Credentialing or
recredentialing is a prerequisite to the final decision of a health
maintenance organization to permit initial or continued
participation by a p hysician or other health c are provider.
1. Physician credentiali ng and recredentialing shall be based
on criteria as provided in the uniform credentialing ap plication
required by Section 1-106.2 of Title 63 of the Oklahoma Statutes,
with input from physic ians and other health care providers.
2. Organizations shall mak e information on credentialin g and
recredentialing criteria available to physician applicants and other
health care providers, participating physicians, and other
participating health care pr oviders and shall provide applicants
with a checklist of material s required in the application process.
3. When economic considerations are part of the crede ntialing
and recredentialing decision, objectiv e criteria shall be used and
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shall be available to physician applicants and p articipating
physicians. When graduate medical education is a consi deration in
the credentialing and recredentialing process, equal recognition
shall be given to training program s accredited by the Accrediting
Council on Graduate Medical Education and by the American
Osteopathic Association. When graduate medical educati on is
considered for optometric physicians, consideration shall be given
for educational accreditation by the C ouncil on Optometric
Education.
4. Physicians or other health care providers under
consideration to provide health care services under a managed care
plan in this state shall apply for credentialing and recre dentialing
on the uniform credentialing applica tion and provide the
documentation as outlined by t he plan’s checklist of materials
required in the application proc ess.
5. A health maintenance organization (HMO) shall determine
whether a credentialing or r ecredentialing application is complete.
If an application is determined to be incomplete, the pla n shall
notify the applicant in writing within ten (10) calendar days of
receipt of the applic ation. The written notice shall specify the
portion of the application that is causing a delay in processing a nd
explain any additional information or correction s needed.
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6. In reviewing the application, the health maintenanc e
organization (HMO) shall ev aluate each application according to the
plan’s checklist of materials required in the application process.
7. When an application is deemed complete, the HMO sh all
initiate requests for primary source verification and malprac tice
history within seven (7) calendar days.
8. A malpractice carrier shall have twenty -one (21) calendar
days within which to respond afte r receipt of an inquiry from a
health maintenance o rganization (HMO). Any ma lpractice carrier that
fails to respond to an inquiry within the all otted time frame may be
assessed an administrative penalty by th e State Insurance
Commissioner of Health.
9. Upon receipt of primary source verification and malp ractice
history by the HMO, the HMO shall determine if the applic ation is a
clean application. If the application is deemed clean, the HMO
shall have forty-five (45) calendar days within which to credenti al
or recredential a physician or other health care provider. As used
in this paragraph, “clean application” means an application that has
no defect, misstatement of facts, improprieties, including a lack of
any required substantiating documentation, or p articular
circumstance requiring special treatment that impedes prompt
credentialing or recredentialing.
10. If a health maintenance organizatio n is unable to
credential or recredential a physician or other h ealth care provider
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due to an application ’s not being clean, the HMO may extend the
credentialing or recredentialing process for sixty (60) calendar
days. At the end of sixty (60) calendar da ys, if the HMO is
awaiting documentation to complete the applica tion, the physician or
other health care provid er shall be notified of the delay by
certified mail. The physician or other health care provider may
extend the sixty-day period upon written no tice to the HMO within
ten (10) calendar days; otherwise the app lication shall be deemed
withdrawn.
11. In no event shall the entire credentialing or
recredentialing process exceed one hu ndred eighty (180) calendar
days.
12. A health maintenance organiza tion shall be prohibited from
solely basing a denial of an appli cation for credentialing or
recredentialing on the lack of board certification or board
eligibility and from adding new requ irements solely for the purpose
of delaying an application.
13. Any HMO that violates the provisions of this subsection may
be assessed an administrative penalty by the State Insurance
Commissioner of Health.
I. Health maintenan ce organizations shall not discriminate
against enrollees with ex pensive medical conditions by excluding
practitioners with practices containing a substantial number of
these patients.
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J. Health maintenan ce organizations shall, upon request,
provide to a physician whose contract i s terminated or not renewed
for cause the reasons for termination or nonrenewal. Health
maintenance organizations shall not contrac tually prohibit such
requests.
K. No HMO shall engage in the practice of medicine or any other
profession except as provide d by law nor shall an HMO include any
provision in a provider con tract that precludes or discourages a
health maintenance organizati on’s providers from:
1. Informing a patient of the care the patient requires,
including treatments or services not provided or reimbursed under
the patient’s HMO; or
2. Advocating on beha lf of a patient before the HMO.
L. Decisions by a health maintenan ce organization to authorize
or deny coverage for an emergency service shall be based on the
patient presenting symptoms ari sing from any injury, illness, or
condition manifesting itself by acute symptoms of sufficient
severity, including severe pain, such that a reasonable and prudent
layperson could expect the absence of medical attention to result i n
serious:
1. Jeopardy to the health of the patient;
2. Impairment of bodily function; or
3. Dysfunction of any bodily organ or part.
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M. Health maintenanc e organizations shall not deny an otherwise
covered emergency service based solely upon lack of no tification to
the HMO.
N. Health maintenance organizations shall compensate a provider
for patient screening, evaluation, and examination services that are
reasonably calculated to assist the provider in determining whether
the condition of the patient re quires emergency service. If the
provider determines that the pa tient does not require eme rgency
service, coverage for services rendered subsequent to that
determination shall be governed by the HMO contr act.
O. If within a period of thirty (30) minutes after receiving a
request from a hospital emergency department fo r a specialty
consultation, a health maintenance organization fails to identify an
appropriate specialist who is available and willing to as sume the
care of the enrollee, the emergency depart ment may arrange for
emergency services by an appropriate special ist that are medically
necessary to attain stabilization of an emergency medical condition,
and the HMO shall not deny coverage for the serv ices due to lack of
prior authorization.
P. The reimbursement policies and p atient transfer requirements
of a health maintenance organization shall not, directly or
indirectly, require a hospital emergency de partment or provider to
violate the federal Eme rgency Medical Treatment and Active Labor
Act. If a member of an HMO is tran sferred from a hospital emergency
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department facility to another medical facility, the HMO shall
reimburse the transferring facility and provider for services
provided to attain s tabilization of the emergency medical condition
of the member in accordance w ith the federal Emergency Medical
Treatment and Active Labor Act.
SECTION 37. AMENDATORY 36 O.S. 2011, Sect ion 6911, is
amended to read as follows:
Section 6911. A. Every health maintenance organization shall
establish and mainta in a grievance procedure that has been approved
by the Insurance Commissioner, after consultation with the State
Commissioner of Health, to provide for the resolution of grievance s
initiated by enrollees. Such grievance procedure shall be approved
by the Insurance Commissioner within thirty (3 0) days of submission.
The health maintenance organization shall maintain a record of
grievances received since the date of its last examin ation of
grievances.
B. The Insurance Commissioner or the State Commissioner of
Health may examine the grievance pr ocedures.
C. Health maintenance organizations shall comply with the
requirements of an insur er as set out in Sections 1250.1 through
1250.16 of Title 36 of the Oklahoma Statutes this title.
SECTION 38. AMENDATORY 36 O.S. 2011, Sec tion 6919, is
amended to read as follows:
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Section 6919. A. The Insurance Commissioner may m ake an
examination of the affairs of any health maintenance organization,
producers and providers with whom the organization has contracts,
agreements or other arr angements pursuant to the provisions of
Sections 309.1 through 309.7 of Title 36 of the Oklah oma Statutes
this title.
B. The State Insurance Commissioner of Health may require a
health maintenance organization to con tract for an examination
concerning the quality assurance program of the health maintenance
organization and of any providers with w hom the organization has
contracts, agreements or other arrangements as often as is
reasonably necessary for the protection of the interests of the
people of this state, but not less freque ntly than once every three
(3) years.
C. Every health maintenance organization and provider shall
submit its books and records for examination and in every way
facilitate the completion of a n examination. For the purpose of an
examination, the Insurance Commissioner and the State Commissioner
of Health may administer oaths to, and examine the officers and
agents of the health maintenance organization and the princip als of
the providers concerning their business.
D. Any health maintenance organization exa mined shall pay the
proper charges incurred in such examination, in cluding the actual
expense of the Insurance Com missioner or State Commissioner of
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Health or the expenses and compensation of any authorized
representative and the expense and compensation o f assistants and
examiners employed therein. All expenses incurred in such
examination shall be verified by affid avit and a copy shall be filed
in the office of the Insurance Commissioner or the State
Commissioner of Health .
E. In lieu of an examination, the Insurance Commissioner or
State Commissioner of Health may accept the report of an examination
made by the health maintenance organization regulatory entity of
another state.
SECTION 39. AMENDATORY 36 O.S. 2011, Section 6920, is
amended to read as follows:
Section 6920. A. A certificate of authority issued under the
Health Maintenance O rganization Act of 2003 may be suspended or
revoked, and an application for a certificate of authority may be
denied, if the Insurance Commiss ioner finds that any of the
following conditions exist:
1. The health maintenance organization (HMO) is operating
significantly in contravention of its basic organi zational document
or in a manner contrary to that described in an y other information
submitted under Section 3 6903 of this act title, unless amendments
to those submissions have been filed with and approv ed by the
Insurance Commissioner;
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2. The health maintenance organization iss ues an evidence of
coverage or uses a s chedule of charges for hea lth care services that
does not comply with the requirements of Sec tions 8 6908 and 16 6916
of this act title;
3. The health maintenance organization does not provi de or
arrange for basic he alth care services;
4. The State Commissioner of Health certifies t o the Insurance
Commissioner determines that:
a. the health maintenance organization does not meet the
requirements of Section 7 6907 of this act title, or
b. the health maintenance organi zation is unable to
fulfill its obligations to furnish health care
services;
5. The health maintenance organization is no longer fi nancially
responsible and may reasonably be exp ected to be unable to meet its
obligations to enrol lees or prospective enroll ees;
6. The health maintena nce organization has failed to correct,
within the time frame prescribed by subsection C of this section ,
any deficiency occurring due to the health ma intenance
organization’s prescribed minimum net wor th being impaired;
7. The health maintenance organiza tion has failed to implement
the grievance procedures required by Section 11 6911 of this act
title in a reasonable manner to resolve valid complaints;
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8. The health maintenance organization, or any pe rson on its
behalf, has advertised or merchandised its services i n an untrue,
misrepresentative, misleading, deceptive or unfair manner;
9. The continued ope ration of the health maintenance
organization would be hazardous to its enrollees or to the public ;
or
10. The health maint enance organization has otherwise faile d to
comply with the provisio ns of the Health Maintenance Organization
Act of 2003, or applicable rules promulgated by the Insurance
Commissioner pursuant thereto, or rules promulgated by the State
Board of Health pursuant to the provisions of Section 7 of the
Health Maintenance Organ ization Act of 2003.
B. In addition to or in lieu of suspension or revocation of a
certificate of authority pu rsuant to the provisions of this section,
an applicant or health maintenance organization who knowingly
violates the provisions of this section m ay be subject to an
administrative penalty of Five Thousand Doll ars ($5,000.00) for each
occurrence.
C. The following shall apply when insufficient net worth is
maintained:
1. Whenever the Insurance Commissioner finds that th e net worth
maintained by any health maintenance organization subject to the
provisions of this act is less than the minimum net worth requi red
to be maintained by Section 13 6913 of this act title, the Insurance
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Commissioner shall give written notice to t he health maintenance
organization of the amount of the deficiency and require filing with
the Insurance Commissioner a plan for correction of the deficiency
that is acceptable to the Insuran ce Commissioner, and corre ction of
the deficiency within a reason able time, not to exceed sixt y (60)
days, unless an extension of time, not to exceed sixty (6 0)
additional days, is granted by the Insurance Commissioner. A
deficiency shall be deemed an imp airment, and failure to co rrect the
impairment in the prescribed time shall be grounds for sus pension or
revocation of the certificate of authority or for pla cing the health
maintenance organization in con servation, rehabilitation or
liquidation; or
2. Unless allowed by the Insura nce Commissioner, no health
maintenance organization or person actin g on its behalf may,
directly or indirectly, renew, issue or del iver any certificate,
agreement or contract of coverage in this state, for which a premium
is charged or collected, when the health maintenance organization
writing the coverage is impaired, a nd the fact of impairment is
known to the health maintenance org anization or to the person;
provided, however, the existence of an impairment shall not prevent
the issuance or renewal of a certificate, agreement or contract whe n
the enrollee exercises an o ption granted under the plan to obtain a
new, renewed or convert ed coverage.
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D. A certificate of authority sha ll be suspended or revoked or
an application or a c ertificate of authority de nied or an
administrative penalty impos ed only after compliance with the
requirements of this section.
1. Suspension or revocation of a certificate of authority,
denial of an application, or imposition of an administrative penalt y
by the Insurance Commiss ioner, pursuant to the provisions of th is
section, shall be by writt en order and shall be sent to the health
maintenance organizatio n or applicant by certified or registered
mail and to the State Commissioner of Health . The written order
shall state the grounds, charges or conduct on which the suspension,
revocation or denial or administrative penalty is based. The health
maintenance organization or applicant may, in writing, req uest a
hearing within thirty (30) days from the dat e of mailing of the
order. If no written request is made, the or der shall be final upon
the expiration of thirty (30) days.
2. If the health maintenance org anization or applicant requests
a hearing pursuant to the provisions of this section, the Insuranc e
Commissioner shall issue a written notice of hearing and send s uch
notice to the health main tenance organization or applicant by
certified or registered mai l and to the State Commissioner of Health
stating:
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a. a specific time for the hearing, which may n ot be less
than twenty (20) nor more than thirty (30) days after
mailing of the notice of hear ing, and
b. that any hearing shall be held at the office of the
Insurance Commissioner.
If a hearing is request ed, the State Commissioner of Health or a
designee shall be in attendance and shall participate in the
proceedings. The recommendations and find ings of the State
Commissioner of Health with respect to matters relating to the
quality of health care service s provided in connection with any
decision regarding denial, suspension or re vocation of a certificate
of authority, shall be conclusive and bind ing upon the Insurance
Commissioner. After the hearing, or upon failure of the health
maintenance organization to appear at the hearing, the Insurance
Commissioner shall take whatever act ion is deemed necessary based on
written findings. The Insurance Co mmissioner shall mail the
decision to the health maintenance org anization or applicant and a
copy to the State Commissioner of Health.
E. The provisions of the A dministrative Procedures A ct shall
apply to proceedings under thi s section to the extent they are not
in conflict with the provisions of Section 313 of Title 36 of the
Oklahoma Statutes this title.
F. If the certificate of authority of a health maintenanc e
organization is suspende d, the health maintenance organization shall
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not, during the period of suspension, enroll any additional
enrollees except newborn ch ildren or other newly acquired dependents
of existing enrollees, and shall not engage in any adver tising or
solicitation whatsoever.
G. If the certificate of auth ority of a health maintenance
organization is revoked, the HMO shall proceed, immediately
following the effective date of the order of revoc ation, to wind up
its affairs and shall conduct no further business except as may be
essential to the orderly conclu sion of the affairs of the
organization. The HMO shall engage in no further advertising or
solicitation whatsoever. The Insurance Commissi oner may, by written
order, permit further operatio n of the HMO if found to b e in the
best interests of enrollees, t o the end that enrollees will be
afforded the greatest practical opportunity to obtain contin uing
health care coverage.
SECTION 40. AMENDATORY 36 O.S. 2011, Section 6 929, is
amended to read as follows:
Section 6929. The State Insurance Commissioner of Health, in
carrying out his or her obligations under the Health Mainten ance
Organization Act of 2003, may con tract with qualified persons to
make recommendations concern ing the determinations req uired to be
made by the State Insurance Commissioner of Health. The
recommendations may be accepted in full or in part by the State
Insurance Commissioner of Health. The State Insurance Commissioner
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of Health shall adopt procedures to ensure that such pe rsons are not
subject to a conflict of interest that would impair th eir ability to
make recommendations in an impartial manner.
SECTION 41. REPEALER 36 O.S. 2011, Sections 1435.40, as
amended by Section 1, Chapter 23, O.S.L. 2016 (36 O.S. Supp. 2020,
Sections 1435.40, 1612.1 and 1622), are hereby repealed.
SECTION 42. This act shall become effecti ve November 1, 2021.
58-1-896 CB 1/21/2021 4:14:55 PM